BusinessE-Commerce

Infibeam and Snapdeal mutually agree to terminate the Unicommerce deal

Snapdeal logo screenshot from app

Snapdeal is one of the very first e-commerce websites in India. It was started alongside Flipkart in 2010 which was not a competitor of Snapdeal back then as the Snapdeal was working as a daily deals website until 2011. In 2011, it started its online marketplace. The Indian e-commerce website started working as an online retailer and was off to an amazing start.

Within three years of turning into an online market for the consumers, the company had reached a staggering 300 thousand sellers. It had over 30 million products with almost 800 categories. The products came from more than 125 thousand regional, international and national brands. They reached almost 6000 cities, towns, and villages in India. The company is backed by some of the big investors such as Softbank, Alibaba Group, and Temasek Holdings.

That said, the company has lost a lot of ground in recent years. It has almost been relegated from the e-commerce competition in India. Flipkart and Amazon have become synonymous to online shopping while Snapdeal has been trying to enter the competition. The strategies of the giants have been way better and bigger than Snapdeal and the discounts, the services, customer satisfaction, everything is better than Snapdeal today.

Given this situation, Snapdeal tried to find a way and merge with one of the big giants. Flipkart was interested in merging with Snapdeal that could help its counterpart find a way back up. This deal was discussed and rumored in 2016, and concrete news came out a year later. A deal was put in place as Flipkart was keen on merging with Snapdeal, however, they had certain conditions for Snapdeal to fulfill. One of those conditions was to get every investor of theirs to back the deal with Flipkart. This was a huge task and Snapdeal couldn’t complete it on time and the deal was called off.

This was the first breakdown of a deal with Snapdeal. Unicommerce, a subsidiary of Snapdeal, was up for sale. Unicommerce is an enablement software for omnichannel services and warehouse management. The Snapdeal arm has around 10 thousand sellers, online retailers, and brands as their clients. This is a huge subsidiary and the profitable one which was up for sale until a few months back. Infibeam had struck a deal worth INR 120 crores ($17.2 million).

Unicommerce eSolutions is worth around 24.63 crores ($3.4 million) and a turnover of 20.27 crores ($2.2 million) as of 31st March 2018. Unicommerce also looks after around 15% of India’s e-commerce transactions and has a strong presence in the Middle East as well. Infibeam was keen on buying this Snapdeal subsidiary but the deal has been called off mutually. The reason given by Infibeam was a vague one as a line in its statement read that the deal couldn’t go through as the conditions put forward by Infibeam weren’t completed in time. The termination of the deal is the second one in as many years and the reasons are also on a similar line.

Snapdeal will have to look into this as they have failed to cater to the conditions put forward by their merging partners or buyers. This is the second deal that was called off and the first merger with Flipkart worth USD 950 million could have changed the fortune of the company. That said, it will be of good health for the company if they were to sort out their practices when it comes to mergers and buyers.

 

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