After months of wrangling, Snapdeal has pulled the plug on a potential deal that would’ve seen rival Flipkart acquiring it.
Snapdeal has decided to go at it alone in India’s burgeoning e-commerce market, where Flipkart and Jeff Bezos’s Amazon are jockeying for pole position.
Snapdeal’s strategy is still hazy but the one thing it is clear about is to be financially self-sustainable. However, it’s too early to say if it will get there, given that co-founders Kunal Bahl and Rohit Bansal have spent nearly a decade to make Snapdeal profitable.
Here is a timeline of Snapdeal’s journey from being a nondescript coupon company to a major e-commerce platform in the throes of transformation:
May 2008: Kunal Bahl and Rohit Bansal, school friends from Delhi Public School, RK Puram, New Delhi, launch Money Saver, an offline coupon-book business.
Bansal, an IIT-Delhi alumnus, had just quit working at American bank holding company Capital One in New Delhi while Bahl, a Wharton graduate, was considering a job with Microsoft in Seattle before his H-1B visa was rejected. The 22-year-olds launched Jasper Infotech in 2007 which sold a booklet of discounted retail coupons. The business failed—it sold just three of the 50,000 booklets printed.
Between 2008 and 2010, the duo tries its hand at mobile coupons and discount cards, before finally deciding to begin selling the coupons online.
Sept. 2009: Receives first round of funding—$2 million from IndoUS Venture Partners.
Jan. 2011: Raises $10 million from Nexus Venture Partners. In June that year, a village in Uttar Pradesh renames itself Snapdeal.com Nagar after the firm commits to providing drinking water, hospitals, and schools.
July 2011: Raises $45 million in a round led by Bessemer Venture Partners and supported by existing investors Nexus Venture Partners and IndoUS Venture Partners. Firm says it wants to double its employee base to 800.
Dec. 2011: Shuts down deals business to become an online marketplace. ”I think our investors were really surprised,” Bahl said later about the decision. ”We were certain about our goal—customers should have certainty of availability of products at the best prices.”
April 2012: Snapdeal makes its second acquisition, online sports goods and fitness equipment seller eSportsbuy.com, for an undisclosed amount. eSportsbuy.com is soon consolidated with Snapdeal and its independent website is shut down. The same month, the company raises $50 million from American e-commerce major eBay and existing investors Bessemer Venture Partners, Nexus Venture, and IndoUS Venture Partners.
May 2013: Acquires Sequoia Capital-backed consumer-to-consumer marketplace Shopo for an undisclosed amount.
April 2014: Buys Doozton.com, a fashion and lifestyle website.
May 2014: Raises another $100 million from BlackRock, Temasek, PremjiInvest, Myriad Asset Management, and Tybourne Capital Management. Joins India’s unicorn club. “We see this financing round as another endorsement of Snapdeal’s differentiated strategy and progress as India’s largest online marketplace,” Bahl says.
Aug. 2014: Raises an undisclosed amount from Tata Sons chairman emeritus Ratan Tata.
Oct. 2014: Japanese firm Softbank invests a record $627 million in Snapdeal. ”We believe India is at a turning point in its development and have confidence that India will grow strongly over the next decade,” SoftBank chairman Masayoshi Son says in a statement. “As part of this belief, we intend to deploy significant capital in India over the next few years to support development of the market.”
That same month, a Mumbai resident receives a soap bar and brick instead of the Samsung Duos smartphone he ordered on Snapdeal, deeply embarrassing the firm.
Feb. 2015: Acquires luxury lifestyle website Exclusively.com.
March 2015: Ropes in Bollywood superstar Aamir Khan as brand ambassador for an estimated Rs15-20 crore as endorsement fee.
April 2015: Acquires a majority stake in digital financial services platform RupeePower.com to create a financial services marketplace. The deal is estimated at $50 million.
May 2015: Acquires Hyderabad-based MartMobi, which helps vendors build mobile apps and sites, for an undisclosed amount.
Aug. 2015: Raises $500 million from Apple iPhone maker Foxconn, Chinese e-commerce major Alibaba, and existing investors SoftBank, Temasek, BlackRock, Myriad, and PremjiInvest. Snapdeal is valued at around $4.8 billion. “This investment in Snapdeal enhances our exposure to India’s burgeoning e-commerce industry. Snapdeal has a strong presence in mobile commerce and it fits our strategy of investing in innovative companies that are transforming the way people transact,” an Alibaba spokesperson says. Meanwhile, eBay sells some portion of its stake.
Oct. 2015: Invests $20 million in logistics firm GoJavas. Snapdeal had bought a 20% stake in GoJavas in March 2015.
Nov. 2015: Aamir Khan voices concern over religious intolerance in India. Snapdeal bears the brunt of the reactions to the comments as users uninstall its app and pull down its rating.
Feb. 2016: Some 200 employees approach Delhi’s labour department saying Snapdeal illegally terminated their services. The company had earlier asked around 200 workers to participate in a “performance improvement plan.”
Receives $200 million in funding from Ontario Teachers’ Pension Plan, valuing it at over $6.5 billion.
Aug. 2016: RupeePower founder Tejasvi Mohanram buys back a part of the company’s stake held by Snapdeal, making the online marketplace a minority shareholder.
Snapdeal shuts down Exclusively.com amid a slowdown in funding and rising costs.
Sept. 2016: Gets new logo and rebrands itself with a new campaign, Unbox Zindagi (or Unbox Life). ”This is actually the beginning to a very long journey. This is not a destination. Being the preferred destination for enabling the achievement of consumer aspirations is something we will have to achieve over an extended period of time through consistent execution at each touch point,” Kunal Bahl says.
Jan. 2017: Losses for fiscal 2016 double to Rs2,960 crore. ”In financial year 2016, we invested our capital in building our capabilities across technology, logistics, and seller ecosystem to support the long-term growth of our business,” a spokesperson for Snapdeal says.
Feb. 2017: Shuts down Shopo.
SoftBank says it lost $350 million from investments in Snapdeal and Ola in 2016.
Snapdeal plans to lay off 600 employees across e-commerce platform Vulcan and Freecharge. The founders announce a 100% pay cut for themselves.
Two senior executives quit as the company struggles to raise funds.
“We started growing our business much before the right economic model and market fit was figured out,” Kunal Bahl says. ”We also started diversifying and starting new projects while we still hadn’t perfected the first or made it profitable. We started building our team and capabilities for a much larger size of business than what was required with the present scale.”
March 2017: There is speculation that Snapdeal is talking to Paytm and Flipkart for a sale. The company denies it. “The information is incorrect and without basis. We are making decisive progress in our journey towards profitability, and all our efforts are aligned in this direction,” the company says.
April 2017: In a case of mistaken identity, many mobilephone users uninstall Snapdeal’s app and give it poor rating, reminiscent of the November 2015 incident, after Snapchat’s CEO reportedly refers to India as a poor country. #BoycottSnapchat is among the top trending topics on Twitter.
May 2017: Snapdeal’s board reportedly meets to discuss a likely sale to Flipkart and the board is convinced about the deal. Rumours surface that Flipkart is looking at valuing the merger at $1 billion. The investment fund owned by Wipro chairman Azim Premji seeks clarity on the interests of minority shareholders. Flipkart and Snapdeal also reportedly sign a non-binding agreement for the merger.
June 2017: Reports emerge that Flipkart is keen on acquiring Snapdeal only for a paltry $400 million; others put the figure at $900 million.
July 2017: Axis Bank, the country’s third-largest private sector lender, acquires FreeCharge for Rs385 crore ($60 million). On July 31, Snapdeal walks away from merger talks with Flipkart. ”Snapdeal has been exploring strategic options over the last several months. The company has now decided to pursue an independent path and is terminating all strategic discussions as a result,” a company statement says.