India’s Snapdeal Marketplace In Talks To Buy Rival ShopClues

Indian eCommerce company Snapdeal is reportedly in talks to buy its rival ShopClues in an all-stock deal. Sources said the due diligence process has already begun, and the proposed transaction is likely to value ShopClues at $200 million t0 $250 million, according to DealStreetAsia.

The deal comes after a possible merger between Flipkart and Snapdeal fell through in 2017. The online retailer has already been looking to raise capital at a valuation of about $2 billion, and the acquisition of ShopClues could help its funding efforts. Snapdeal has also been struggling to compete with eCommerce giants Flipkart and Amazon, and the deal could help the Gurgaon-based company add a customer base in Tier 3 and Tier 4 markets where ShopClues is active.

It shouldn’t come as a surprise that, earlier this year, Snapdeal threw its support behind India’s new eCommerce rules that will hurt Amazon and Walmart, which owns Flipkart.

In a letter, Snapdeal said some unnamed companies were taking advantage of “glaring loopholes” to operate inventory-based eCommerce models, adding that the “loud protests” over the new rules were an “indication of how effective this regulation” will be. Snapdeal CEO Kunal Bahl wrote that the current timelines for foreign companies to meet the new rules are “adequate for compliance,” and that “every nation has a right to frame policies that best suit its economic and social needs.”

For its part, ShopClues raised nearly $150 million in funding in 2016 to reach a billion-dollar valuation, becoming the seventh Indian startup firm to join the unicorn club.

However, it was reported that the platform has been struggling to meet orders as of late. The company receives about 40,000 orders per day — a deal with Snapdeal could bolster its operations to fulfill those orders.

Both companies already have a common investor: venture capital firm Nexus Venture Partners. As of 2018, Snapdeal had a market share of 1.9 percent, while ShopClues’ market share was 1.6 percent.