Flipkart raises Snapdeal offer amid increasing competition

In a bid to consolidate its dominance of India’s e-commerce market, Flipkart has increased its takeover bid for Snapdeal

  • By Rachel Connolly | Tuesday, July 18th, 2017

Flipkart co-founder Bin Bansal

Indian e-commerce firm Flipkart has offered between $900m and $950m for smaller rival Snapdeal, a marked increase on its opening bid range of $800m to $850m. As reported by Reuters, the Snapdeal board is currently reviewing the new proposal.

The deal is critical to Flipkart’s ambitions to retain its dominant position within India’s booming e-commerce market. The market, which has been spurred by the country’s growing number of internet users, has become an increasingly lucrative business venture in recent years.

According to the latest Internet Trends Report – published by Silicon Valley-based venture capital firm Kleiner Perkins Caufield Byers – the number of internet users in India grew by a staggering 40 percent last year, rising to around 355 million.

Increased competition from foreign firms – most notably Amazon – has led Flipkart to look elsewhere in order to consolidate its position in the market

While this rise has historically represented a significant boon to Flipkart’s business model, increased competition from foreign firms – most notably Amazon, who recently acquired permission to sell groceries in India – has led the company to look elsewhere in order to consolidate its position in the market.

The Internet Trends Report suggested that, despite Flipkart’s current dominance, Amazon is likely to capture the lion’s share of the market in the long term. Buoyed by the growing number of internet users, Amazon reported an 85 percent increase in Indian sales year-on-year, marking a significantly faster growth than its Indian competitors.

Snapdeal’s largest shareholder, Japan’s Softbank Group, hopes to limit Amazon’s slice of the Indian e-commerce market, and is said to support Flipkart’s plans to grow through acquisition.

Meanwhile, Snapdeal has also garnered interest from another Indian e-commerce firm, Infibeam, and is set to consider both proposals in the coming days. Snapdeal is expected to reach a decision within the next 10 days.