Snapdeal board meets to renegotiate with Flipkart
On Tuesday, the Snapdeal board had turned down a takeover bid of $700-750 million from its larger rival
It appears that the last word has not been said on Snapdeal's acquisition by Flipkart.
Negotiations have been rife for a while since SoftBank, the largest investor in Snapdeal, has been leading the talks for the proposed sale of the ecommerce firm and is negotiating to make a separate investment in Flipkart through the proposed transaction. If the deal goes through, it will mark the biggest transaction in the burgeoning e-commerce sector in India.
What went wrong?
It was not long ago when Snapdeal was riding a valuation $6.5 billion. But it lost out on the race to home grown ecommerce giant Flipkart and foreign rival Amazon as it failed to acquire an identity for itself.
And it’s not Snapdeal alone. A slew of ecommerce ventures are staring at uncertainty after scaling at a rapid pace over the last five years. Concentrating only on discounts, most ecommerce players in the country today don’t have a strong business model in place backed by calculated unit economics and thus, with every order they are losing money. This perhaps explains their constant chase for capital which is a prerequisite for their survival.
Both Bahl and Bansal had earlier written a letter to their employees stating the problem. “At Snapdeal, we find ourselves at an important point in our journey - we know where we want to go and now is the time to make the choices of how we will get there....Has our company and industry been going through a troubled time? Absolutely. Did we make errors in our execution? No doubt about that......Over the last 2-3 years, with all the capital coming into this market, our entire industry, including ourselves, started making mistakes,” they said adding, they started growing their business much before the right economic model and market fit was figured out.
