Nothing changed when Flipkart bought Myntra and Jabong. Will it be the same case with Snapdeal as well?

As the Flipkart and Snapdeal merger is underway what does it mean for you and me
Atom Merger Wednesday, May 24, 2017 - 15:58

The country’s largest e commerce player Flipkart has signed a binding term-sheet to acquire rival Snapdeal, which values Snapdeal at about $1 billion.

As the due diligence for the country’s biggest e-commerce merger begins, a lot is being talked about what the merger would mean for Flipkart, its rivals and for the industry.

Some experts say that the deal will give Flipkart additional supply chain infrastructure to take on Amazon, some say that while Snapdeal’s business may not all come to Flipkart, the merger will bring more people and infrastructure to Flipkart.

But for consumers like you and me, what will this merger mean?

Firstly, a lot depends on what the final contours of the deal will be. Will Flipkart retain Snapdeal as an independent website like it did with Myntra and Jabong? Or will the Snapdeal brand be killed?

Sreedhar Parasadh Partner - Internet business and startups, KPMG says that nothing will change, just like nothing changed for customers of Jabong after Flipkart acquired it. Arvind K Singhal, CMD of Technopak Advisors agrees. 

“I see no impact at all. Snapdeal has been sliding rapidly in the past 6-8 months. Most of its business has been picked up by Flipkart or Amazon. It is not like Snapdeal was providing stiff competition and therefore there will be an impact on consumers in terms of choice or pricing. So, the merger is not going to make any impact, either positive or negative, to consumers,” Arvind says.

But with a larger player’s help, Sreedhar says, Snapdeal may be able to get back on its feet.

“Ideally they would retain the brand. Snapdeal has a lot of acceptance in North India. The past six months have not been that great for Snapdeal in terms of offers, product variety and customer experience in general. But with a new management and the width of Flipkart’s backend helping them with brands and vendors, Snapdeal may be able to come back to its peak. And the kind of customer experience Snapdeal was able to deliver to its customers will come back,” says Sreedhar.

It is when company is at its peak that customers get the best of offers, product variety and delivery experience. So, for Snapdeal’s loyal customers, it will be like going back to good old days.

But with Snapdeal rapidly losing customers, why would Flipkart want to invest in a brand that is already on its way down, Singhal questions.

And the best example here, he says, is Jabong and Myntra. “Myntra is much more powerful. You don’t see any significant action being done by Flipkart to promote Jabong in a big way. I suspect that the same thing will happen with Snapdeal. I don’t think they are going to create a second brand because there is not much differentiation,” he adds.

Another benefit could probably be the fact that customers will get access to a majority of India’s e-commerce market. Snapdeal has the highest seller base in the Indian e-commerce industry with over three lakh sellers. This, combined with Flipkart’s seller base of over one lakh, will give consumers access to almost every seller’s product base.

One medium term effect could be that there will be several learnings that will be indirect. Things that Flipkart can learn from Snapdeal and vice versa – be it lessons, or mistakes.

But in a larger sense, most experts believe that there will be no significant impact on online buyers. Sreedhar says that the Flipkart-Snapdeal merger is more of an industry phenomenon than a customer phenomenon.

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