Takeaways from Snapdeal’s IPO filing
- ByStartupStory | December 22, 2021
Softbank-backed Snapdeal on December 21 filed draft papers to raise Rs 1,250 crore in a fresh issue through an initial public offering (IPO). The e-commerce firm claims to be having 70 percent of its customers coming straight from Tier 2 towns and therefore focuses on selling affordable products with value for money all under Rs 1,000.
Snapdeal, founded in 2010, once rivaled Amazon.com Inc. and Walmart Inc.’s Flipkart in the burgeoning India market, but fell behind as its deep-pocketed competitors invested heavily to grab market share. Revenue from operations dived 44% to just 4.7 billion rupees in the year ended March 2021, though its loss narrowed by more than half to 1.25 billion rupees.
Snapdeal has refashioned itself to stand apart from its bigger competitors and focus on value-driven e-commerce. The company, whose other backers include eBay Inc. and Sequoia, recorded operating revenue of about 2.4 billion rupees in the six months to Sept. 30.
Snapdeal’s IPO, targeted for early next year, comes after a record year for India market debuts. Food-delivery pioneer Zomato Ltd. set off the rush to market, followed by successful offerings from the likes of FSN E-Commerce Ventures Ltd., which operates the Nykaa beauty business. One97 Communications Ltd., which runs digital payments giant Paytm, pulled off the largest IPO in the country’s history, at $2.4 billion, but its shares quickly tumbled.
Founded by Kunal Bahl and childhood friend Rohit Bansal, Snapdeal began as a deals website before expanding in online retail. In 2017, as the company struggled, Masayoshi Son’s SoftBank, one of its biggest backers, pushed the founders to merge with archrival Flipkart. Bahl and Bansal ultimately decided not to proceed with the deal, requiring them to focus on reducing their cash burn.
The decade-old startup, also backed by BlackRock Inc., Temasek Holdings Pte and EBay Inc., has since shifted its business model to focus on Bharat — the non-English speaking, non-affluent, non-urban and non-tech savvy bulk of India’s population. Amazon and Flipkart tend to cater to big-city buyers, selling big-ticket items like premium smartphones and high-priced electronics.
Follow Startup Story
Related Posts
