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After six months of negotiations, Snapdeal on Monday announced it is ending merger discussions with Flipkart, to pursue an independent path: Snapdeal 2.0.
“The decision is made. There is zero ambiguity. We will be continuing the Snapdeal journey as an independent company,” said founders Kunal Bahl and Rohit Bansal in a letter to employees, which BusinessLine has accessed.
Exhorting the team, they said the e-commerce opportunity in India was immense and “the surface of this $200-billion market has barely been scratched.” With a “tremendous team”, “loyal customers”, “motivated sellers” and a “phenomenal platform”, Snapdeal always had “all the ingredients of success”, they claimed
In addition to the $60-million cash the company received from the sale of digital wallet company FreeCharge to Axis Bank last week, Snapdeal is looking to sell non-core assets, like its fully-owned logistics services firm Vulcan Express in order to be financially self-sustainable.
According to sources, Snapdeal values Vulcan at around $15 million; it reckons it can sustain itself over the next few months with ₹480 crore in the kitty. But a large chunk of its 1,400 employees will be laid off with this standalone, independent business model, they said.
A statement from Snapdeal’s largest stakeholder, SoftBank Group Corp, said, “We respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy and to remain invested in the vibrant Indian e-commerce space.”
Opting for 2.0 Explaining the Snapdeal 2.0 approach, the founders said: “There isn’t going to be one successful model for e-commerce in India... and as long as one’s strategy is differentiated and has a clear path to success...a great company... can be built.”
Snapdeal, they noted, is “already profitable at a gross profit level with clear visibility to making upwards of ₹150 crore in gross profits in the next 12 months.”
It intends to keep costs under control and work towards becoming a hyper-efficient culture, delivering profitable growth month-on-month, they added.
The letter concluded with an inspiring quote from the founders: “Success is never final, failure is rarely fatal; it is the courage to continue that counts. Lets work to make Snapdeal 2.0 a super success.”
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