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Indian ecommerce rivalry heats up

News, 04 August 2015

NEW DELHI: Snapdeal, the Indian online marketplace, is reportedly raising $500m in investment from Chinese ecommerce giant Alibaba, Japan's SoftBank and Taiwanese device manufacturer Foxconn in what will be a challenge to Amazon and Flipkart.

According to Re/code, an online tech publication, sources revealed that Alibaba has been engaged in talks with Snapdeal for much of the year but has decided to spread its investment with the others.

The investment in Snapdeal represents Alibaba's first direct investment into India's burgeoning ecommerce sector, which is growing rapidly on the back of better mobile connectivity and a huge youthful population.

It also sets out a clear challenge to Amazon India, which just last month was reported to be in line for investment of $5bn from its US parent company, as well as to Flipkart, the other major ecommerce player in India.

Snapdeal is adopting a different strategy from its two main rivals who co-founder and CEO Kunal Bahl believes are too focussed on the sale of physical products.

Consequently, Snapdeal has started to develop an ecosystem of sites through its acquisition of various companies focussed on different areas of ecommerce.

FreeCharge, for example, is a popular service in India that enables consumers to add money to prepaid phone plans and prepaid TV plans.

Snapdeal has also acquired RupeePower, an online comparison site that specialises in credit cards and loans.

Speaking to Re/code in April, Bahl said that in addition to the sale of physical goods, he wanted to bring all sorts of other transactions online, ranging from financial services to education and healthcare, in what he believes could eventually become a $250bn opportunity.

Data sourced from Re/code; additional content by Warc staff