Posts Tagged ‘flipkart’

Snapdeal Saga- This is the first step towards Snapdeal’s merger with PayTM

February 23, 2017 Leave a comment


Snapdeal laying off 600 people and the two founders forgoing their salaries has been dominating the startup news headlines since Wednesday. Although a lot of people took the news as a surprise, but had one been following the incidents that led to yesterday’s email from the founders, this should have been expected.

Lets see what happened in last couple of months. 

Jason Kothari was brought in to clean the toxic elements created during the tenure of Rahul Yadav as the Founder-CEO of Housing. To his credit, Jason de-toxified Housing to make it attractive enough for PropTiger to bite in for an ‘all stock deal’- which means peanuts.

Within a couple of days of the Housing-PropTiger deal, Jason was announced as the Chief Strategy & Investment officer at Snapdeal.

‘Strategy’ and ‘Investment’. 

Snapdeal along with Flikart has been finding it tough to get the right valuation for raising the next round of funds that both of them want to raise. While Kalyan Krishnamurthy has been tasked with cleaning up Flipkart, Jason has been brought in to clean up Snapdeal of the toxins and make it attractive enough for investors. Most of the money losing initiatives have either been shut down or are in the process of being shut down. The founders, in their email also stressed on the renewed focus on ‘core’ business and strengths. The ‘core’ here being e-commerce.

SoftBank- The thread that binds Housing and Snapdeal. 

SoftBank was the biggest investor in Housing. It is also a very significant investor in Alibaba too. Alibaba has been flirting with the idea of buying into or buying out Snapdeal for long now. Alibaba also has been the biggest investor in PayTM. And, to make things complex, PayTM also has an e-commerce arm. Alibaba would never like to invest in two competing companies (it might have done so in 2014-15, but today the story is different). Sometime back, PayTM did spin off its e-commerce platform into separate business from its payments business (or vice-versa).

Opportunity for Alibaba, SoftBank, PayTM & Snapdeal.

The current situation presents a ripe opportunity for all the parties involved. Snapdeal has an opportunity to set its house in order, Alibaba has a wonderful opportunity to enter one of the biggest e-commerce markets in the world via PayTM investment and set up a head-on clash with Amazon for the long pending battle of ‘South-East-Asia’ between Amazon and Alibaba (Alibaba has already started digging in its heels in the SEA market with the Lazada investment).

Not an Insider News. Not even a rumour. My own views.

All the events discussed above are either factual and have led to where we are today or logical and plausible extension of the same into the future. I strongly feel the events in the future will go the way I have spelled out. If not, the involved parties might want to use this article as a food-for-thought for chalking out their strategy.


Why Snapdeal merging with Flipkart or Amazon will not make sense? Or might.



Last couple of days have been ripe with rumors of Snapdeal reaching out to Flipkart and Amazon for a merger/buyout. YEstreday Kunal Bahl poked fun at these rumors with a tweet on the name that the merged venture will have. Fun aside, lets see is this kind of acquisition/merger would actually make sense or not.

On the face of it, acquiring Snapdeal will not make any sense for Flipkart or Amazon. Take the case of Amazon’s attempt of acquiring Jabong in late 2014. Rocket Internet (at that time I was leading one of Rocket Internet’s ventures in South East Asia) was looking at a valuation of $1.2b whereas Amazon was in no mood to pay more than $700m. Within weeks of the talks falling through, Amazon launched Amazon Fashion to counter Jabong. Later Jabong bled to its on death and was acquired by Myntra (a Flipkart group company) for $70m. That’s peanuts.

Jabong acquisition actually made some sense as Amazon was not very strong in the Fashion category. Snapdeal on the otherhand is a smaller Amazon. Learning from the Jabong experience, I don’t think amazon would even consider bidding for Snapdeal.

Now for the same reason, it does not make sense to acquire Snapdeal. Why would either of them not wait for Snapdeal to bleed weak till it dies or can be bought at a much lower valuation (just for the brand) as in the case of Jabong-Myntra deal.

Now, can it make sense as well? Remember when Ola acquired Taxi for Sure a couple of years ago for $200m? That deal not only helped Ola become the undisputed champion of ride-hailing space in India, but also removed an irritating competitor who was forcing to burn much more cash than what Ola would have liked to. Is Snapdeal that kind of rival for Amazon and Flipkart? The answer is- Yes. Do they want to remove Snapdeal from the competition? The answer is- definitely Yes. But do they want to right now? The answer is- No. Paying $200m for Taxi for Sure was peanuts as compared to the benefits it brought. Snapdeal is a unicorn. I don’t think either Amazon or Flikpart’s investors would ever agree to shell that kind of money ever. Even buying a small stake in Snapdeal would be equal to a billion dollar funding round for the two larger rivals.

So, let the rumors be rumors. I am not sure if anything is going to happen on this beyond being just rumors.

2014- The year of e-commerce Startups!

December 30, 2014 Leave a comment



2014 will be remembered in the startup ecosystem of India which was  completely dominate by the e-commerce startups. Be it the success of mega funding  rounds of Flipkart and Snapdeal or the price wars raged by the e-retailers on each other. Or, the sweet-bitter memories of the one-day mega sales and shopping festivals. Or, the protests by the small shop owners who claimto have been mauled by the e-retail giants. Love it or hate it- the year was that of the e-commerce.

The Indian e-comm industry has yet to learn a lot of tricks of the trade, but one thing is for sure, it is here to stay and will only grow big.

The potential for growth can be judged from the fact that the total size of the Indian e-retail revenue for the year 2014 is less than half the revenue for the Singles Day sale of Alibaba in China. Market size of retail in India is estimated to be at $600 billion a year. Which makes the e-retail industry less than even 1% of the total retail market (organized and unorganized). There are many gaps in the current market that need to be addressed and will be addressed by new players. The coming years will see this percentage share grow to at-least 6-8% which gives a huge space for growth for the existing players as well as a fertile ground for new startups.

With new investments flowing into the Indian e-retail industry, I also see consolidation happening in the market. The 2013 and 2014 also saw some consolidation happening in the e-retail space with Flikart acquiring Let’sBuy & Myntra and Amazon trying to acquire Jabong. The consolidation will gain momentum in next two years to eliminate some of the redundancy in the market.

All said and done, the next couple of years are going to see a lot of action in the e-retail space. Get ready for a lot of click-click!

Alibaba Planning to Snap-a-Deal: Indian e-Retail getting hotter

September 18, 2014 Leave a comment


The news of Alibaba, which has sales more than Amazon and eBay combined, looking for a share of the e-retail industry in India is definitely a great news for the e-retail industry in the country. The already hot industry scene is about to get even hotter.

The industry as such has been attracting large size investments from across the globe. But, this investment is different. Flipkart and Amazon have been considered Snapdeal’s biggest competitors till date. Where as Flipkart has been able to in crease its valuation to about $6 billion (with the last investment round of $ 1 billion), Snapdeal is still around $1 billion in valuation. Close on the heels of Flipkart announcing the closure of $1 billion investment round, Amazon announced an investment of $2 billion in its India operations. With these two announcements from Flipkart and Amazon, Snapdeal had started to look a shade pale. But, the news of Alibaba making an investment of $300 million in Snapdeal does bring it back into the game. Although, $300 million might look small in comparison to the investments Flipkart and Amazon have announced, the name Alibaba itself lends an lot of weight to Snapdeal.

Although no one is clear on how Alibaba will leverage its Indian investment, but one thing is for sure, it will definitely give a lot of competition to the other two giants.

An advice for Flipkart (and other start-ups)

January 20, 2013 Leave a comment


Flipkart established its name as an online bookstore. Although it has ventured into many more product categories in recent years, it has been only moderately successful in establishing its name as an online retailer and grow beyond the ‘bookseller’ tag. One reason for the same is customer satisfaction beyond delivering books. I had a first hand experience of a major flaw in their delivery network last week.

I have been using Flipkart for order books for more than two years now and they never gave me a chance to complain. The service was just perfect.

On 13th Jan ’13 I ordered some fitness equipment and was assured of delivery within 3-4 days. I got a call from delivery boy on 17th Jan morning that he will be delivering the package at my address in next 30 mins. I waited till evening and no one came. I called the guy in the evening to enquire about my package, he assured me that the same will be delivered next morning. I waited whole day, no package came. In the evening I called up the Flipkar helpline and on enquiring the status of my ordered was told that the order was cancelled (although the Flipkart website still showed me the status ‘approved’). On enquiring further, the call center agent told me that the delivery boy could not find the address and cancelled my order. I was astonished to know that the order was cancelled- that too without informing me! I protested to the call center agent that how can you guys cancel my order that too without my permission and without caring to inform me? The agent squarely blamed the ‘Blue Dart’ courier guys on the fiasco and told me if I still want the item, I’ll have to place a fresh order.

And how were the books delivered to me on the same address? The agent told me the books and small items are delivered by their own delivery boys and for other items, they use Blue Dart.

Here is a perfect example of choosing your partners in business. For a customer like me, who was very satisfied with the services of Flipkart, the expectation was to match the expectations they had managed to set with me. But, itwas not the case. Why? because on all the earlier occasions, the delivery was done by Flipkart itself and on this last occasion they entrusted the responsibility to Blue Dart and messed it up. Even though Flipkart have been able to set high standards of service delivery for their own delivery staff, but the same lacks in their partner- Blue Dart. For a customer like me, I don’t care whether the package is being delivered by Flipkart or someone else, I expect Flipkart to own the responsibility.

May be, this is the reason that Flipkart is not able to go beyond being a very good ‘online bookseller’ to becoming a full fledged ‘online retailer’.

A lesson for all start-ups (and other businesses as well) on how an improper partner can derail your long term goals and business strategy.

What happened to LetsBuy? Being choked to death by new parents!

May 21, 2012 1 comment

A few weeks ago, when Flipkart acquired LetsBuy (for a rumored amount of $25 million), there was a lot of speculation on what might be the future for the two.  I had also put forward my two cents in an earlier blog post  on where the online retail space is heading to. Flipkart management, in various statements had mentioned that LetsBuy will keep functioning as a separate entity.  But, as things are folding out, it seems that LetsBuy as a brand will not exist anymore.

There have been reports that all the warehouses of LetsBuy, except the one at Delhi, have been closed. There are also reports that 250 odd staff of LetsBuy at Gurgaon will be laid off.

So what actually happened?

One can only guess, and here is what I think what could have happened. I have three strong reasons which would have made the management think of shutting down LetsBuy

First, both the companies Flipkart and LetsBuy had same set of investors- Tiger Global and Accel Partners. Flipkart, which had majority of its revenues coming from the sale of books and smaller electronic items, had been expanding its scope of operations. Although LetsBuy had a wider range of products to sell, the scale was much smaller than Flipkart. Of late, it had been struggling to raise capital from investors. It made sense for the current investors to mediate and help Flipkart take over Lets Buy than infuse m0re funds into Lets Buy and increase competition for Flipkart.

Second, both Flipkart and Lets Buy had operations in major cities. It did not make sense for the management to keep a parallel set of operations for both the entities. The set of cities in which the Lets Buy warehouses have been shut down already have warehouses of Flipkart.

Third, having a separate brand for selling similar items again doesn’t make sense. Also note, LetsBuy’s prices for consumer electronics were slightly lesser than those published by Flipkart. Although LetsBuy does have some brand recall in the mind of consumers, but Flipkart is a much recognized brand. Thus, killing LetsBuy makes all the more sense than keeping it.

All said and done, what was hailed as a marriage of convenience for Flipkart and LetsBuy, did not turn out so. There is more than what meets the eye. The guys front ending Flipkart (Sachin and Binny Bansal) are just the show and mouth piece of bigger players controlling the show- the investors.

Letsbuy sell-off and Zansaar investment- Where are we heading to?

March 9, 2012 4 comments

About two weeks ago, the start-up world woke up to the $25 million acquisition of by flipkart. A week back we had the news of Zansaar securing a $6 million investment from Accel Partners and Tiger Global. The e-retail world in India is abuzz with lots of hectic activity, so much so, it is confusing the consumer on who is offering what?

The news of letsbuy being on the block was in the air since last few months. First time I heard it, I was told they are looking for a $80-85 valuation. But, when the deal was struck, it was pinned at $25 million. Why such a drastic difference in ‘asking’ and ‘getting’ dollar value? Of late, the has been a lot of start ups coming up in the e-commerce and the deals space. As sources put it, was finding it hard to raise additional capital and hence the sale. The fact that both and Flipkart had common investors made it easier for the deal to go through. With the acquisition, Flipkart, which has not been able to shed the ‘bookseller’ tag will have a wider range or products to sell.

The VCs have already burnt their fingers in funding the deals based start-ups. Both the demand and the buy sides of the deals space were over rated. Today, I wee most of the deals sites selling nothing more than dinner, spa and massage coupons. The next best bet for investors is the e-commerce space. But, have a look around and you will find many websites selling similar products- hardly we see any differentiation. Least to say, the space is already overcrowded. Recently there was the case of which started as a deals site, pivoted once and became a e-commerce site and finally shut down due to what the promoters said was ‘hypercompetition’ in the e-commerce arena.

Whats the future?

As I see it, although the Indian e-commerce sector has a lot of potential, you cannot have a lot pf websites selling the same stuff. Its not  as in the case of physical outlets where proximity to the customer is an important factor. In online retail, each of the portal is at same distance- just a click away. Here is what I see happening in future:

1. After a few years, there will be a handful of mega-online-retailers (with/without offline stores). This will be achieved at the cost of either shut down or acquisition of other e-retailers. These are the likes of Flipkart, Letsbuy and e-bay. A lot will depend on the spectrum of choice offered and efficiency in handling customer dissatisfaction.

2. Along with these mega-online-retailers, there will be a few dozen ‘specialized’ retailers selling high end or niche products but with a much smaller catalog. Freecultr is one example of the high end players. Chumbak is an example of niche products player.

3. There will be another set of ‘specialized’ retailers selling only one category of products e.g. accessories for gadgets.

4. I am not very sure if one-category-sites e.g.– selling bags,– selling sun shades and glasses will be able to survive the mega-e-retailers. They will have to shut shop.

5. Group deals websites will become history as the e-retailers will incorporate simiral of not same discounts into the price (guided by the sales volumes).

The above five points are just the over view of the e-retail world dynamics in India today. There are much more details to these five points. I would like to detail each one of these pointers, whenever I get time. Till then, enjoy the rain of offers and offerings around you!