When it started, it was a fairly simple deal. Existing investors won’t put any money into Snapdeal anymore or raise additional funding from any new investors and the company is to be sold lock, stock and barrel to Flipkart. All in all, a well-thought through, strategically constructed arranged marriage. Everybody wins.
But, just a few months down the line, it will be fair to say that when it comes to selling anything online, the dynamics are far from simple. In a manner of offline speak, Snapdeal now resembles a proper garage sale. The neon ‘on sale’ sign has been put up in the garden and the townspeople, suitors are walking in, thick and fast. Quite a few are picking some of the lot up, peering close, as if to arrive at its actual worth. Their faces, perplexed. Like that only of a bargain hunter; except, one still in the search. Some are known to have made an offer. Some have walked out, shaking their heads. Some have been told by Snapdeal that some have made an offer.
It is all rather fascinating and a subject that demands, we stay on top of it. So, what’s going on? Here’s the story of the Snapdeal garage sale, in four parts. First, the mothership.
The company, once valued at $6.5 billion, has now little to show for itself. It is now left to haggle for a price between $700 million and $1 billion. It has not only lost its large customer base but also its sellers. Over the last year, its seller base has halved, say current and former employees, and it is processing 47,000 orders a day compared to the 120,000 orders a day last year. Compare that to Flipkart and Amazon, which fulfil 300,000 orders a day, combined, and have doubled them from this time last year.
The gap is huge. And the number of orders a day won’t increase. Snapdeal has virtually stopped all marketing spend. It has even slashed commissions on affiliate sales platforms. Currently, it offers zero commission on phones, its hottest-selling category, and about 1.5% on electronics. Affiliate sales platforms are websites that offer deals on electronics and drive traffic to e-commerce portals. They receive a commission from the sale. “There doesn’t seem to be any value for Flipkart. Had it been someone else who is getting into e-commerce for the first time, then it would have been really interesting,” says a senior Snapdeal employee, who is no longer with the company. He asked not to be named as his current company does not allow him to talk to the media.
So, what is really left of value in the parent company? Marketplace operations used to be a large part of Snapdeal, but that’s a shell now.