#Asia Snapdeal Saga: This is the first step towards Snapdeal’s merger with PayTM

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Some food-for-thought for chalking out an e-commerce and investment strategy

Snapdeal’s layoff of 600 people and the two founders’ forgoing their salaries has been dominating the startup news headlines since Wednesday. Although a lot of people took the news as a surprise, even if one been following the incidents that led to yesterday’s email from the founders, this should have been expected.

Let’s see what happened in the last couple of months:

Jason Kothari was brought in to clean the toxic elements created during the tenure of Rahul Yadav as the Founder-CEO of Housing. To his credit, Jason de-toxified Housing to make it attractive enough for PropTiger to bite in for an ‘all stock deal’ — which means peanuts.

Also Read: India’s Snapdeal lays off employees; Co-founders admit to making mistakes

Within a couple of days of the Housing-PropTiger deal, Jason was announced as the Chief Strategy & Investment officer at Snapdeal.

‘Strategy’ and ‘Investment’

Snapdeal, along with Flipkart, has been finding it tough to get the right valuation for raising the next round of funds that both of them want to raise. While Kalyan Krishnamurthy has been tasked with cleaning up Flipkart, Jason has been brought in to clean up Snapdeal of the toxins and make it attractive enough for investors. Most of the money losing initiatives have either been shut down or are in the process of being shut down. The founders, in their email also stressed on the renewed focus on ‘core’ business and strengths. The ‘core’ here being e-commerce.

SoftBank: The thread that binds Housing and Snapdeal

SoftBank was the biggest investor in Housing. It is also a very significant investor in Alibaba, too. Alibaba has been flirting with the idea of buying into or buying out Snapdeal for long now. Alibaba also has been the biggest investor in PayTM. And, to make things complex, PayTM also has an e-commerce arm. Alibaba would never like to invest in two competing companies (it might have done so in 2014-2015, but today the story is different). Sometime back, PayTM did spin off its e-commerce platform into separate business from its payments business (or vice-versa).

Also Read: Is Paytm merging with Snapdeal?

Opportunity for Alibaba, SoftBank, PayTM & Snapdeal

The current situation presents a ripe opportunity for all the parties involved:

  • Snapdeal has an opportunity to set its house in order.
  • Alibaba has a wonderful opportunity to enter one of the biggest e-commerce markets in the world via PayTM investment and set up a head-on clash with Amazon for the long pending battle of ‘South-East-Asia’ between Amazon and Alibaba (Alibaba has already started digging in its heels in the SEA market with the Lazada investment).

Not an Insider News. Not even a rumour. My own views

All the events discussed above are either factual and have led to where we are today or logical and plausible extension of the same into the future. I strongly feel the events in the future will go the way I have spelled out. If not, the involved parties might want to use this article as a food-for-thought for chalking out their strategy.

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The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, submit your post here.

Featured Image Copyright: dedivan1923 / 123RF Stock Photo

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