Published By : 15 Jul 2016 | Published By : QYRESEARCH
The two e-commerce companies namely, Flipkart and Snapdeal currently are running low of funds and the only way they can think of to take pace is by merging together. They have been encountering a major hit from the American Giant Amazon. Amazon has already committed a sum of $5 bn to India.
In the last week, Snapdeal had lowered the levy it has been charging sellers and has also announced that the company post 14th July will exhibit the lowest marketing fees of all these competitions within half of its products. Snapdeal cannot be blamed for this move. This is owing to the fact that when Flipkart earlier this month tightened its refunding rules and increased its fees such as passing the prices incurred on product returns to the sellers themselves, it then encountered a major blackout.
This is why in order to gain some potential, Flipkart and Snapdeal will have to join hands and this is the most logical strategy for both these companies. The outcome will be that management team will be imparted an additional time for attempting a turnaround. In addition, Snapdeal has already been making the right noises with its CEO focusing on revenue instead of gross merchandise value. On the other hand, the change by Flipkart have been even more intense. A count of 4 senior executives have bid goodbye in the past few months and the company also has a new CEO, named Binny Bansal from the previous co-founder Sachin Bansal.
However, changes like these are unlikely to bring a rapid turnaround in the state of both Snapdeal and Flipkart. They will require more cash in the coming years and we can obviously foresee the fact that the investors will be highly reluctant to invest in these companies till Amazon is in the limelight.