In the light of the news that Snapdeal will soon be acquired by Flipkart, experts in the field say that consolidation is happening in a big way in the Indian e-commerce space and that only a handful of players will eventually remain in the market. There are also media reports that Flipkart has come up with a revised buy out offer of around $900 million for Snapdeal and its board is evaluating the proposal. Though there is confusion about when this deal is likely to come through, Japan based SoftBank Group, which is the largest investor in Snapdeal, is keen to see the deal become reality and may invest additional money in Flipkart when it does happen. Meanwhile, there are also reports that the Snapdeal board is also evaluating the offer from Infibeam, an Ahmedabad based publicly listed e-commerce firm.
"Snapdeal is almost like a dead company and is on a ventilator like situation. They have laid off employees, their business has suffered and the company continues to be in bad shape. SoftBank is a common investor in both Snapdeal and Flipkart but has a majority stake in the former. There are also talks by SoftBank about pumping in additional investments in Flipkart if it acquires Snapdeal. Flipkart also requires additional cash and is looking for fresh investments and eventually will acquire Snapdeal, though it may take some time. Minority share holders in Snapdeal such as Premji may also want Flipkart to acquire Snapdeal, as it will bring in additional investments in the company and would make it a strong rival to Amazon," Kris Lakshmikanth, CEO of Head Hunters India Limited told THE WEEK.
On the other hand, experts such as Alok Shende of Ascentius Consulting in Mumbai feels that through the acquisition Flipkart will be able to capitalise the large dealer and distribution network of Snapdeal. "Though a price of around $850 million for Snapdeal is not at all justified, SoftBank may increase its share of investment in Flipkart, if the deal goes through as Flipkart is likely to give a fight to Amazon post the acquisition. Consolidation in the e-commerce industry in India is bound to happen with smaller players being gobbled up by large players. Even some of the employees working in Snapdeal will hope for a Flipkart take over. But, Infibeam, which is a publicly listed company, may not acquire Snapdeal as it will require huge cash and their share holders will surely question this move," said Shende. Off late, there are also reports that some digital players such as Paytm are aiming to acquire Snapdeal’s digital payment unit Freecharge though there is no clarity regarding this.
