Snapdeal founders Kunal Bahl and Rohit Bansal have opted to pursue a different path that will keep Snapdeal as an independent company, sources told Reuters.
Flipkart and Snapdeal, the first- and third-largest e-commerce companies in India, respectively, have both seen their growth stagnate of late, and will now need to figure out how to boost their individual performances as they go their separate ways.
Snapdeal will reportedly restructure as a simplified company, dubbed “Snapdeal 2.0.” The e-commerce company is in the process of selling off some of its assets — it already sold FreeCharge, its digital payments arm, and is reportedly looking to offload Vulcan Express, its logistics unit. The simplified version of Snapdeal will look to improve its performance in India via a more streamlined approach, but the company has a lot of ground to make up. Snapdeal garnered a $6.5 billion valuation in February 2016, yet failed to fetch even $1 billion in its negotiations with Flipkart.
Meanwhile, Flipkart is at risk of losing considerable market share. While it still holds the top spot in Indian e-commerce, Bank of America Merrill Lynch estimates that Flipkart’s market share will stagnate through 2019, and Amazon will gain significant ground on the India-based company. Flipkart previously tried to fight off Amazon by purchasing eBay’s India business, and put up its latest effort in its negotiations with Snapdeal. It is not yet clear which other companies Flipkart may look to acquire, or if it will employ a different strategy, like trying to boost its subscription service to rival Amazon Prime, but it must improve its stagnating growth quickly if it’s to remain competitive against the US behemoth.
Without the merger, Amazon is in a position to lead the market in the near future. The number of products ordered through Amazon Prime in India has increased 70% since its launch in the country last year, and the number of unique purchasers on Amazon in the region grew 113% from Q1 2016 to Q1 2017. With these improvements, and Amazon’s financial commitment to the country, the Seattle-based e-commerce giant is poised to succeed in India rather rapidly. If Flipkart and Snapdeal fail to jump-start their own growth, Amazon may take the lead in Indian e-commerce before too long.
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