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After months of negotiation, the sale of Indian ecommerce company Snapdeal to its archrival Flipkart appears to have come unstuck.

“Snapdeal has been exploring strategic options over the last several months,” says a statement from Snapdeal. “The company has now decided to pursue an independent path and is terminating all strategic discussions as a result.”

Snapdeal’s biggest investor SoftBank had been pushing for the deal, but the early investors and founders negotiated hard for a better payout. Finally, the Snapdeal board was reported to have accepted an offer of US$900 million to US$950 million from Flipkart, which was to be sent to the shareholders for approval.

Meanwhile, Snapdeal sold off its payments subsidiary FreeCharge to Axis Bank last week for US$60 million. This was an 85 percent discount from the US$400 million it paid to acquire the company in 2015. But the all-cash deal has given Snapdeal leeway to explore more options.

Snapdeal co-founder and CEO has talked of pivoting to an asset-light eBay-like marketplace that only connects buyers and sellers, without holding inventory.

“We have a new and compelling direction – Snapdeal 2.0 – and have made significant progress towards the ability to execute this by achieving a gross profit this month,” says Snapdeal. “In addition, with the sale of certain non-core assets, Snapdeal is expected to be financially self-sustainable.”

SoftBank, on its part, appears to have washed its hands off the Flipkart-Snapdeal deal it had pursued vigorously for so long. “We respect the decision to pursue an independent strategy. We look forward to the results of the Snapdeal 2.0 strategy,” says SoftBank in a statement released today.

Many a slip between cup and lip

Other takeover options cannot be ruled out either, as the Snapdeal saga has taken many twists and turns.

It remains to be seen what shape Snapdeal 2.0 takes. But it’s pertinent to point out that eBay had to beat a retreat from India, despite its long experience with an inventory-less model. Its Indian arm became a part of Flipkart as part of a US$1.4 billion funding round led by Tencent earlier this year.

Amazon has committed to investing US$5 billion into Indian ecommerce, and has set up a string of warehouses around the country for smooth logistics and good customer experience. The well-funded Flipkart and SoftBank-backed Paytm are other options for consumers.

To compete with them, Snapdeal 2.0 will have to provide compelling customer experience, which is harder to do without holding inventory. Otherwise it would become a fringe player.

Other takeover options cannot be ruled out either, as the Snapdeal saga has taken many twists and turns ever since it lost market share drastically to Amazon last year. Several large offline retailers in India are without an online presence that comes anywhere close to the traction that the ecommerce sites get. They could also be in the market to buy Snapdeal.

“There can be many a slip between cup and lip,” a SoftBank spokesperson had quipped to Tech in Asia during the negotiations for the sale of Snapdeal. The road ahead appears equally slippery.

See: The underbelly of the startup world, as revealed by a failed ecommerce pioneer

The story so far

In February 2010, Kunal Bahl and Rohit Bansal started Snapdeal under parent company Jasper Infotech. Snapdeal grew from a daily deals site into a full-fledged ecommerce marketplace with around 300,000 sellers and 800 product categories, delivering to 6,000 Indian cities and towns. Its main investors include SoftBank, BlackRock, Temasek, Foxconn, Alibaba, eBay Inc., Premji Invest, Intel Capital, and Bessemer Venture Partners that pumped in about US$1.8 billion into the company.

Snapdeal acquired FreeCharge, a mobile wallet and top-up site in April 2015 – the biggest startup acquisition in India until then. The Snapdeal co-founders sold some of their shares at its peak valuation of US$6.5 billion when it raised US$200 million from the Ontario Teachers’ Pension Plan and others in February 2016. This came less than a year after it raised US$500 million from Alibaba Group Holding, Foxconn Technology Group, and SoftBank at a valuation of US$5 billion.

Despite being among the top three ecommerce companies in the country – Amazon and Flipkart being the others – Snapdeal couldn’t outdo its rivals on any count and its market share dwindled as Amazon and Flipkart stepped on the gas.

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