India’s ecommerce marketplace Snapdeal, in the wake of cutting costs and conserving cash, is exiting its teleshopping network, DEN-Snapdeal TV Shop by divesting its complete stake in the company.
Snapdeal currently owns 17.13% in the network, and 82.87% is held by multi-system operator (MSO) DEN Networks, as stated in a report by The Financial Express.
Commenting on the development, an official spokesperson from Snapdeal told Inc42, “The decision to exit the Den Snapdeal JV was taken in 2016, as part of our periodic evaluation to determine continued alignment of investments with our business needs. In execution of the decision, we had substantially reduced our stake mid-last year. The residual stake will be divested over the next few months to complete the process of exit.”
Snapdeal entered into a 50:50 joint venture with DEN Networks Company to launch a market-oriented TV channel. The TV channel operates as a marketplace platform for facilitating the sale of branded and unbranded merchandise and services, including vouchers offered by third-party sellers subject to necessary approvals.
As per an official statement, the channel has a widespread reach across India and is present in 52 Mn households. It also launched a web platform in 2016.
Following the initial partnership, in July last year, DEN Networks increased its stake in the venture from 50% to 82.87%, for $916K (around INR 6 Cr).
Founded in February 2010, by Kunal Bahl along with Rohit Bansal, Snapdeal claims to offer over 65 Mn products across 1000+ categories. Currently, it claims to have more than 300K sellers on its platform.
Of Shutdowns And Slowdowns
Snapdeal’s woes continue in the wake of bleeding losses and severe course correction.
In February 2017, Snapdeal shut down app-only, zero-commission, affiliate marketplace Shopo. In August 2016, Tejasvi Mohanram, founder of online consumer and SME credit platform RupeePower, acquired by Snapdeal in March 2015, bought back a major share of his company. Following that, the company also shut down Exclusively – a marketplace for premium branded fashion and lifestyle products.
Snapdeal’s other acquisition, the logistics platform GoJavas temporarily suspended operations in August 2016. Another one, esportsbuy shut down in 2012, two months after Snapdeal acquired the startup.
In February this year, the company fired about 600 people from its workforce, in a cost-cutting exercise. In the same month and also stopped the incentive programme for customers that was previously launched through affiliates.
The unicorn has, till date, raised about $1.76 Bn funding in 12 rounds. The Jasper Infotech-run company is looking to raise funds again, and its current valuation is pegged at somewhere around $4 Bn. In November 2016, Softbank Group Corp, which holds around 32% in Snapdeal, marked down close to $555 Mn in two of its Indian investments, cab hailing firm Ola and Snapdeal.
While the homegrown ecommerce player is having a hard time, counterpart Flipkart emerged from a prolonged series of markdowns and closed a $1 Bn funding round at a valuation of $10 Bn from undisclosed investors, earlier this month.