The deal comes after a possible merger between Flipkart and Snapdeal fell through in 2017. The online retailer has already been looking to raise capital at a valuation of about $2 billion, and the acquisition of ShopClues could help its funding efforts. Snapdeal has also been struggling to compete with eCommerce giants Flipkart and Amazon, and the deal could help the Gurgaon-based company add a customer base in Tier 3 and Tier 4 markets where ShopClues is active.
In a letter, Snapdeal said some unnamed companies were taking advantage of “glaring loopholes” to operate inventory-based eCommerce models, adding that the “loud protests” over the new rules were an “indication of how effective this regulation” will be. Snapdeal CEO Kunal Bahl wrote that the current timelines for foreign companies to meet the new rules are “adequate for compliance,” and that “every nation has a right to frame policies that best suit its economic and social needs.”
However, it was reported that the platform has been struggling to meet orders as of late. The company receives about 40,000 orders per day — a deal with Snapdeal could bolster its operations to fulfill those orders.
Both companies already have a common investor: venture capital firm Nexus Venture Partners. As of 2018, Snapdeal had a market share of 1.9 percent, while ShopClues’ market share was 1.6 percent.