Back in June 2016, there were reports that Flipkart was in talks with Bennett, Coleman and Co. Ltd (BCCL) for a funding deal. BCCL owns media entities like The Times of India, The Economic Times and few others.
As per regulatory filings, the deal indeed materialized. In an ad-for-equity deal, BCCL purchased a minority stake in Flipkart for Rs. 260 crore. Earlier it was speculated to be a Rs. 500 crore deal.
In exchange of the Class B equity shares, Flipkart got cash and advertising space across BCCL’s media platforms. Out of the total deal amount, the media conglomerate released Rs. 26 crore in December 2016.
By now it’s common knowledge that Flipkart is looking to raise funds. And that getting sufficient funds isn’t going to be easy for the Indian etailer because of the repeated devaluations and top-management chaos. To improve its financial report card, the company has started cost cutting.
The deal with BCCL could help Flipkart on two fronts – to reduce the advertising expenses and a cash relief of Rs. 260 crore. But would it help Flipkart to sustain against Amazon that has deep pockets? And would other investors be this generous?
The current state of affairs at Snapdeal is also similar to its rival Flipkart. Be it devaluation, heavy losses, down round funding, or the growing pile of consumers’ & sellers’ complaints, the Indian etailer is under a lot of pressure.
But Snapdeal’s founder Kunal Bahl is optimistic about touching profitability in the next two years. The etailer might be able to do that with the help of its top-selling product categories and cost-cutting. The home-grown online marketplace experienced a three times surge in sales of its kids fashion category.
“The Kids fashion category witnessed an unprecedented 3X surge. Ethnic wear came out as a favourite for young girls with 60% of ‘kids fashion for her’ purchases – lehenga choli being the most sought after. Popular trends reflected in the buying preference for girls were lace, polka dots and floral prints and the most popular colours were pink, red and blue,” said Snapdeal.
Would that help Snapdeal to achieve its profitability dream?
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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