Dissecting Snapdeal 2.0: Can it stand against Amazon, Flipkart?

Snapdeal 2.0 can reduce cost but, it's going to be harder to improve the shaky customer experience

Kunal Bahl and Rohit Bansal – co-founders of Indian ecommerce company Snapdeal – went from zeroes to heroes overnight this week in some media reports. They fought a boardroom battle and regained control from their big investor, SoftBank, by walking away from talks to sell the struggling firm to arch rival Flipkart, proclaimed a prominent newspaper.

We don’t know what derailed the deal after months of negotiation. Was it the size of the payout to the founders that was said to be part of the deal? Was the final offer of 4950 million too low for some of the early investors in a company that was valued at 46.5 billion at the start of 2016?

Amazon vs Ebay
 

One problem is that it gets harder to ensure a good customer experience in a marketplace without inventories, where all and sundry become sellers and deliveries can get messy. That is why Amazon stuck to the managed model despite the early success of Ebay, which at one time could offer a much wider selection of categories and products.

So, even though Snapdeal 2.0  can reduce cost by not holding inventory, it’s going to be harder to improve an already shaky customer experience. 

Rapid decline of Snapdeal
 

Snapdeal lost market share drastically last year, while Flipkart managed to hold its own long enough to raise a life-saving funding round early this year.

Snapdeal Sale 2.0?
 

For Flipkart, it may not be much of a setback. It never seemed overly enthusiastic about the deal, inching its offers up from 4700 million to 4950 million, while loading the terms with indemnity clauses.

On the contrary, many in the company would be secretly relieved at not having to go through a process of assimilation.

This is an excerpt from Tech in Asia. You can read the full article here