Snapdeal – Flipkart Deal Is A No Go , Snapdeal To Focus On Snapdeal 2.0
Snapdeal looked certain to be Flipkart’s next big acquisition and usher in a duopoly era in the e-commerce sector with Flipkart and Amazon the only two remaining big players. But, on Monday Snapdeal said it was terminating the talks of selling off its stakes to Flipkart, to pursue a new path.
A Snapdeal spokesperson in a statement said, “As we have been exploring strategic options over the months, we have decided to pursue an independent path and terminate all strategic discussions” interestingly without naming Flipkart. The negotiations between Flipkart and Snapdeal for a possible acquisition were said to be mediated by Snapdeal’s principal investor, SoftBank.
Flipkart offered to buy out Snapdeal for a revised amount, valued in the range of $900 million to $950 million last month, but the deal has seemingly fallen through as Snapdeal prepares for Snapdeal 2.0. Flipkart’s offer was discussed with Snapdeal’s investors Ratan Tata and Aseem Premji as well. Kunal Bahl, co-founder and CEO of Snapdeal has insisted to focus on the road ahead of rebuilding the company and focussing on the growth of its business.
We have a compelling direction (Snapdeal 2.0) to create life-changing experiences for millions of buyers and sellers across the country. With the sale of certain non-core assets, we expect to be financially self-sustainable. We look forward to the support of our community, including employees, sellers, buyers and other stakeholders in helping us create a designed-for-India commerce platform.
Flipkart recently sold Freecharge, which it bought for Rs 2,500 crore to Axis bank for Rs 385 crore. Snapdeal 2.0 is turning out to be a difficult chapter for staff and investors alike. Snapdeal has let go of 600 employees in the last month without any notice and only one month’s severance package.
Kunal Bahl, co-founder of Snapdeal elaborated on their new plan, Snapdeal 2.0 and said that it would make possible for anyone to setup an online and focus on providing a wide range of products at a great price. He also stated that they have made progress on this path and are in line to make a profit of Rs 150 crore in the next 12 months.
Last July, Snapdeal boasted a work-force of 9,000 employees. According to a report, Snapdeal is planning to let go off 1,000 of its 1,200 current employees and carry forward with the Snapdeal 2.0 mission with the remaining people. The decision of not taking the deal put forth by Flipkart seems to have taken industry experts by surprise. But, Kunal Bahl has explained that the deal was too complicated to execute.
What Snapdeal 2.0 does for the company is to be seen in the coming months, but the resurgence of Flipkart and the domination of Amazon sure pose a stiff competition for Snapdeal in the Indian e-commerce market.