In India’s ongoing e-commerce war, Snapdeal is the most likely to become a casualty.
Despite being the country’s third largest e-commerce company, Snapdeal captures a meagre 10.8% of the market. Rivals Amazon and Flipkart are far ahead, accounting for over 30% of the market share each.
The Delhi-based company is bleeding profusely and it does not even have enough cash to survive another year. Several top-level exits and layoffs haven’t helped either, and the drowning company is in need of a lifeboat. Cue, Flipkart.
Rumours of Flipkart taking over operations of the struggling Snapdeal have been rife for weeks now. And recent events at Snapdeal strongly point to turmoil within. Here are the key events that have unfolded at Snapdeal, ever since the merger talks started doing the rounds.
For the year ended March 31, 2016, Snapdeal posted a Rs2,960 crore (around $462 million) loss. Meanwhile, the company’s valuation slipped drastically from $6.5 billion during its last funding round in February 2016 to $1.5 billion by March this year.
Last week, it was dealt another big blow. Japanese investor Softbank, which has been pushing for a merger with Flipkart, wrote off a combined $1.4 billion in the value of Snapdeal and ride-hailing company Ola.
Although the devaluations have not led Snapdeal to officially desert the playing field yet, some of its key board members and employees aren’t showing the same persistence. Ever since the consolidation rumours started doing the rounds, a number of heavy-hitters have packed up and left.
In February this year, Snapdeal’s head of corporate development Abhishek Kumar and senior vice president Sandeep Komaravelly ended their stint with the cash-strapped online marketplace. A couple of days later, Tony Navin, the head of partnerships and strategic investments, followed them out of the door.
If Snapdeal has been trying to plug the departures, it has had little success: Kalaari Capital’s Vani Kola, a director of Snapdeal’s parent company Jasper Infotech, stepped down from Snapdeal’s board on May 2. The company’s general counsel for two years, Ashish Chandra, also called it quits, Moneycontrol reported on May 15.
“The company is getting consolidated and it would be another four to five months before the merged entity decides on the various roles,” Chandra told legal news site Bar & Bench, hinting that there is some truth to the acquisition rumors. “Therefore, I have decided to move on. It is the right decision for me.”
No easy way out
Investors may be coming on board but the impending merger has met some detractors: Snapdeal’s sellers.
The All India Online Vendors Association (AIOVA), comprising of nearly 2,000 sellers, have demanded a halt to the possible merger between Flipkart and Snapdeal in a letter addressed to Commerce and Industry ministry.
Snapdeal is “on the verge of shutting down or merging with another e-commerce marketplace due to lack of funds,” the sellers said in the letter, which was reviewed by Quartz. The association claims that 500 sellers have “unsettled financial matters with the current management of Snapdeal.” A list of these unpaid retailers was submitted to Snapdeal’s management in an informal manner in March this year, but the company did not serve any resolution.
The disgruntled sellers on the platform have now asked that the merger only be allowed if more than three-quarters of them give their go-ahead.