Snapdeal seems to require a saviour. It started when differences began to crop up among the investors of Snapdeal regarding the future of the e-commerce company. Now, it is being speculated that loss-making company is likely to get merged with Flipkart.
The confirmation is likely to happen at the end of May. The proposal is backed by SoftBank Corp, the Japanese investor in Snapdeal, which owns 30% stakes of Snapdeal. The other investors include Nexus Venture and Kalaari Capital, which owns 11% and 8% of the stakes respectively.
SoftBank is in talks with US-based Tiger Global, Flipkart’s biggest investor for considering the merger. The management board of Flipkart is in favour of this merger. Both Flipkart and SoftBank prefer a share swap ratio of 1:10 in their favour. Also, SoftBank is looking for holding at least 20% in the merged entity.
SoftBank has offered USD 50 million to buy out the stakes of the Snapdeal’s founders, Kunal Bahl and Rohit Bansal. According to the sources, the founders have accepted the offer but have asked for an assurance that all the 2,500 Snapdeal employees should stay on after the alliance. In 2015-16, Snapdeal has posted losses of Rs 2,960 crore.
The e-tailer which has over a million customers visiting its site daily has been battling for the past 15 months. On the other hand, Flipkart, which has currently over 100 million customers, has its share of problems too. Founded by Sachin Bansal and Binny Bansal, Flipkart’s losses were also doubled to Rs 2,306 in the year 2015-16.
Last year, the company lost its number one position to Amazon India, a subsidiary of the US retail giant Amazon. The success of Amazon can be attributed to a better business model. They have tried to maintain 3 basic principles of online shopping i.e. providing a huge collection of products for the customers, maintain low prices, and providing a great shopping experience.
The customers are considered to be the king in the retail. But online shoppers are so fickle that they only look for low prices, offers and discounts. The big merger between Flipkart and Snapdeal would likely to raise customer’s expectations. Visit dealsandcouponz.in/blog/ for exclusive deals and enjoy great savings. Watch out this space for more updates.