Snapdeal refuses to sign a merger with Flipkart

Nirmal Singh Lotus Green came across a piece of information that Bengaluru Online marketplace Flipkart Ltd might gain from the decision by their less competitor rival Snapdeal to drop down the proposal sale, which will be saving them from the distraction of owning a pesky asset would have added more to its business during the time when the company is busy in fixing its ties with their rival Amazon India.

Snapdeal (Jasper Infotech Pvt. Ltd) refuse to take part in the sale of Flipkart on Monday which did present an offer to buy the online marketplace for for $850 million in stock. While the Snapdeal’s investor SoftBank Group Corp, is taking up forward the talks to buy shares worth $1.5 billion in Flipkart, mentioned in a report on Monday.

Nirmal Singh Lotus Green appreciates the amount that Flipkart had offered for Snapdeal was measured just too high by investors and analysts, giving a clue that Snapdeal’s monthly gross sales have had plunged to as low as Rs350 crore, even lower than the Flipkart’s fashion firm Myntra.

Moreover, the India’s e-commerce market has hit another low after 2016, because now there is no room left for any horizontal retailers, Nirmal Singh Lotus Green noted. Flipkart is definitely going to find it troublesome in setting a place for itself in the horizontal marketplace fighting its competitor Amazon, although it is all set to buy another leading ecommerce firm eBay.

“Flipkart has definitely dodged a bullet with this deal not going through. The Snapdeal integration would’ve been an unnecessary headache. The only reason why they agreed to buy Snapdeal in the first place was because of the SoftBank investment. And those investment discussions are happening anyway. So, if you can get the milk without buying the cow, why would you need to buy the cow at all,” said one of the partners who refused to reveal his identity.

For the benefit of Tiger Global Management, the Flipkart-Snapdeal have merged, reported by the Mint on April 17. This will give Flipkart an opportunity to invest fresh capital. As far as operational perspective is concerned, Snapdeal made very meager efforts to buy from Flipkart. As far as market is concerned, it has dived in the past few years, precisely since the start of 2017 when it was propelled to cut the hundreds of jobs and slash spending in other areas.

Nirmal Singh Lotus Green really appreciates the efforts made by the giant e-commerce agency which is ruling market since its launch.  If we look into the statistic, then only 11.7 per cent of Indian smartphones users have had Snapdeal’s app installed until June, as compared to 29.8% for Flipkart and 39.6% for Amazon.

Nirmal Singh Lotus Green further mentions, “The market-share gains Flipkart would have made from this transaction have reduced for every month that the deal has been in negotiation,” said Aman Kumar, chief business officer at KalaGato.