Can Amazon Takeover Flipkart? Antitrust Watchdog Wants To Know; Will Snapdeal Acquire Shopclues?
With a major change in e-commerce policies in India, news have reportedly been whopping in that there is an antitrust watchdog assessing the e-commerce sector of India, to understand their evolution and implications they might pose in the e-commerce competitions.
On the similar lines, with already not a very long list of e-commerce giants in the country, the Gurugram-based Snapdeal, is finally in its last stages of taking over its closest rival, Shopclues. After Walmart acquired Flipkart last year, India has become a huge pool for booming e-commerce acquisitions.
Amazon to Take Over Flipkart?!
We’ve already covered in our previous articles of how the Indian policies have been emulating the Chinese counterpart of flourishing the Alibaba group, its home company. India has been trying to achieve the same for its home vendors to bring maximum sales to them, especially in the online retail sector. It has done this by reforming certain FDI norms and putting some barriers on foreign giants like Amazon and Flipkart, to adjust their operations.
India’s antitrust watchdog is assessing the domestic e-commerce sector, which could pose a threat to Amazon and Flipkart, as they dominate online sales in the country. The Competition Commission of India, headed by the Ministry of Corporate Affairs, cleared that they are conducting this step to understand the evolution and progress of e-commerce markets in the country, along with their methods, strategies and business practices.
It deeply mentions its seriousness by adding that in the unforeseeable future, if Amazon takes over Flipkart, the whole market would become one-sided. To avoid such collisions and scenarios, there needs to be a thorough antitrust watch on such areas. This study is being conducted by the Big 4 giant, Ernst & Young.
Snapdeal Acquiring Shopclues: Shortlisting the E-commerce Sector in India:
After the major acquisition of Bangalore based Flipkart by Walmart last year, there is now being final rounds of discussion of Snapdeal, the fourth -largest player in the e-comm sector, to acquire its closest rival, Shopclues at a valuation of $200-250 million.
Nexus Venture Partners is said to have initiated this deal, being the common investor between the two companies. In this deal, each of Shoplclues’ investors will get a Snapdeal share and Shopclues is to get at least a 30% stake in Snapdeal.
Snapdeal has had a rollercoaster ride in past few years, performing below par. Luckily, in 2017 after reshaping its business model and introducing Snapdeal 2.0, it brought down its loss by 87%, from Rs 4,647.1 crore to Rs 613 crore in just one year and increasing its order numbers from 30,000-40,000 to 2.5 lakh per day. In contrast, Shopclues had been doing pretty bad, with shrinking business and reducing number of orders.
With such an acquisition, both the companies can generate advantages, as Snapdeal can widen its reach into Tier-II cities and focus better on low-prices products. With Amazon now focusing to shift beyond metropolitan areas and tier II cities, there has to be aggressive hustle for Snapdeal.
There will always be a constant reform in the policies governing FDI and today, e-commerce sectors’ reforms, where we can continually expect to hear news about consolidations and acquisitions.