In India, the third biggest online marketplace Snapdeal has turned down a takeover overture from its larger rival Flipkart.
Talks between the two have been ongoing for months and apparently continue despite the rebuff, according to Reuters.
Snapdeal is apparently looking for a $1bn bid but Flipkart has apparently offered somewhere in the region of $850m. The Snapdeal board has rejected the bid. Flipkart is already backed by Microsoft, Tencent and eBay.
There’s a strong case to argue that this opening salvo is a sign of smoking out intentions. Flipkarts’s offer for Snapdeal is lower than expected but it’s a way of focussing minds and proving the seriousness of the discussions. The received wisdom is that a merger between the two is the only realistic way of taking Amazon in India. The seattle based giant has its sights set on India and has cash to spend.
A Flipkart and Snapdeal seeks to establish a serious competitor that could see off Amazon in India. India is the second most populous country in the world after China and if a nascent and developing ecommerce marketplace. It’s also easier understand from a western perspective: there are colonial links and a shared language in English that makes it less tricky than China to understand.
Roughly 500 million Indians shop online and by 2020 India is expected to generate $100 billion in online retail revenue and roughly a third of that is expected to be in the fashion sector. Are you interested in India as an export market?
