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SNAPDEAL WAR CHEST TO SWELL BY $ 650 MN [Mail Today (India)]
[October 16, 2014]

SNAPDEAL WAR CHEST TO SWELL BY $ 650 MN [Mail Today (India)]


(Mail Today (India) Via Acquire Media NewsEdge) DELHI- BASED online retailer Snapdeal is poised to raise another $ 600 million to $ 650 million from investors led by Japan's SoftBank Corp to take on arch rivals Flipkart and Amazon in the ongoing war for a bigger slice of the fast growing e- tail sector.



According to reliable sources, the fresh funding, which would be the biggest investment in the country's e- commerce sector after Flipkart raised $ 1 billion in July, is expected to be formally announced next week. Both Snapdeal and SoftBank, however, declined to comment on the issue.

Apart from SoftBank, other investors in Snapdeal include eBay Inc, Temasek Holdings Pvt Ltd and Ratan Tata, the chairman emeritus of the Tata Group.


Sources disclose that Nikesh Arora, Vice Chairman of SoftBank Corp is a former Google hand who has a good rapport with Snapdeal founder and CEO Kunal Bahl.

If Snapdeal closes the proposed new round, it would have raised nearly $ 1 billion since its inception in 2010. The Kunal Bahl- run company has raised $ 233.7 million earlier this year in two rounds of funding. It had mopped up $ 100 million from Temasek Holdings Pvt. Ltd, BlackRock Inc. and Premji Invest in May before raising $ 133.7 million from global giant e- Bay and other companies in February. Former Tata group chairman Ratan Tata had bought a small stake in Snapdeal in August.

Soon after Flipkart announced the $ 1 billion fund raise, Amazon. com Inc.' s chief executive Jeff Bezos announced that the world's largest online retailer would invest as much as $ 2 billion into its India business as it aims to become the market leader.

Radhika Aggarwal, co- founder and chief marketing officer, ShopClues. com said there has been a renewed faith in e- commerce business in India. " Such developments is good for the industry and for customers, who will ultimately benefit from the competition." " The market trade model is becoming a huge hit. This is a very exciting phase for us. Currently, all the three big e- commerce players— Amazon, Flipkart and Snapdeal are fighting with each other but we at Shopclues.

com are offering a wide range of products than any of them. We too plan to grow big," she added.

Having topped up their war chests with recent fund- raising efforts, Flipkart and arch rival Snapdeal are locked in a fierce battle, offering huge discounts on goods to woo customers in the rapidly expanding e- commerce market.

Consumers have become the biggest gainers in the e- tail battle with discounts up to 60 per cent on various products.

Flipkart, as co- founders Sachin and Binny Bansal claimed to have created, e- commerce history with their high voltage ' Big Billion Day' mega sale on October 6 raking in $ 100 million through a billion hits on the company's website in mere 10 hours.

Snapdeal had on the same day clocked sales of " crore a minute" which would translate into roughly the same as Flipkart's claim. Amazon has also launched a sale from October 4 to 6, labelling it the " Mission to Mars" weekend, and followed up by announcing another sevenday Diwali Dhamaka sale beginning October 10.

Marketing expert and Pinstorm CEO Mahesh Murthy said, " The Indian e- commerce sector is characterised by undifferentiated portals that have to raise money to win customers, not from uniqueness, but via discounting.

This is good news for consumers, as this funding will subsidise products and make them available below cost. But it is likely bad news for the ecom portals who are now ready for yet another round of all- out war to determine a last man standing".

ONLINE NUMBER GAME .. According to Technopak, the Indian retail industry is valued at $ 525 billion now, with online's share at about 1% . By 2020, the retail industry is estimated to double in size while online will grow more than six- fold.

.. India's e- commerce industry is likely to quadruple to $ 43 billion over the next five years from $ 10 billion in 2013.

.. The e- commerce sector lags behind China — where online sales are expected to top $ 180 billion this year.

.. Flipkart is targeting $ 3 billion in total value of goods sold this fiscal.

Recently, Amazon chief Jeff Bezos said the value of goods sold by Amazon India in a year had topped $ 1 billion . Snapdeal, too, has crossed the $ 1 billion milestone this year.

.. Flipkart raised $ 1 billion this year and Amazon announced investment of $ 2 billion in its India operations.

When Flipkart raised funds this year, it was valued at $ 7 billion . Gurgaon- based Snapdeal, in contrast, was valued at $ 1 billion . .. Snapdeal is close to raising $ 600-$ 650 million to expand operations.

(c) 2014 India Today Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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