Two Months After The Flipkart And eBay-IN Merger, Snapdeal Suffers The Aftermath!


eBay had hit India in 2005, two years before Flipkart’s arrival, a year after it acquired a minor player for about $50 million.

However, it was never able to capitalise on this competitive advantage, while Flipkart, Snapdeal, ShopClues, and Amazon were all soon to fly ahead of the company.

As Flipkart acquired eBay India recently, eBay Inc. has been credited with 5.4% of the total stakes in the domestic online marketplace.

After the acquisitions being announced in April 2017, Flipkart had completed its acquisition formalities in August.

But this merger had changed many micro and macro dynamics of Indian e-commerce space.

On a positive front, the merger was a boon for eBay India and Flipkart.

A report had quoted:

eBay Inc. had gained $167 million through the $211 billion sale of its Indian arm to Flipkart.

The SEC report says:

During the third quarter of 2017, we received a 5.44 percent ownership interest in Flipkart in exchange for our eBay India business and a $500 million cash investment, resulting in a cost method investment of $725 million.

Post-merger, Flipkart and eBay have also signed an exclusive cross-border trade agreement so that their customers can access the inventory of each other’s sellers.

And that looked pretty logical too as Flipkart and eBay have a complementary business model- eBay is determined on consumer-to-consumer (C2C) channel transaction, and lets sellers sell used and refurbished goods as well. Flipkart, on the other hand, only lists sellers who sell brand new products, and work on the B2C model.

It is also reported that Flipkart may sell its returned products and exchange in offer products on eBay.

But what is more interesting is that the major loss between this confluence of two e-business giants is of the Snapdeal.

eBay’s investment in Snapdeal in 2013 was expected to be a precursor to a merger of the two entities, but that never happened.

Earlier this year, the merger between Snapdeal and Flipkart was called off and this extended seal of deal has put the Snapdeal in more trouble on the competitive front as the final decision turned out to be a blessing for Flipkart – which had already acquired fashion portals Myntra and Jabong, digital payments platform PhonePe, startups like LetsBuy and Jeeves for customer services which led to its further expansion and rooting the position of country’s largest e-commerce site even deeper.