Snapdeal Freecharge Acquisition
Snapdeal Freecharge Acquisition
Snapdeal Freecharge Acquisition
Acquisition
ANKITHA KURIAKOSE
MBA
ROLL NO : B2253
About Snapdeal
• Snapdeal is an Indian e-commerce company based in New Delhi, India
• Over 60 million products across 800+ diverse categories from over 125,000
regional, national, and international brands and retailers
• Has partnered with several global investors and individuals such as SoftBank,
BlackRock, Foxconn, Alibaba, eBay Inc., Intel Capital, Mr. Ratan Tata, among
others.
About Freecharge
• The amount paid by the user for recharge is returned in form of shopping
coupons of some of the top retailers in India, thereby making the recharge
virtually free
• While most Snapdeal customers are in the 25 to 35-years age group, most
FreeCharge customers are 18 to 25 years old
• The venture, whose core strength is mobile phone recharges, is popular with
the youth because the segment tends to use small pre-paid packages and
FreeCharge offers free coupons of various kinds with every recharge
• Snapdeal’s objective was to add a number of related offerings around its core
platform (Alibaba’s model).
• Huge opportunity - only about 3 million — of the total 75 million mobile
recharges were being done online
• The scope to strengthen the daily transaction rate (>1 million transactions daily)
• While Snapdeal received over 70% of its orders from tier-2 cities and beyond,
FreeCharge received less than 30% orders from these geographies. Now,
Snapdeal, with deep rooted networks in non-metros, can take Freecharge and
unlock the value potential waiting to be tapped there.
• The valuation of Snapdeal getting a boost for its next round of funding. For
investors, the customer base and daily transaction rates are key parameters
when they evaluate a company.
Sale of Freecharge to Axis Bank
• After nearly a year of searching for a buyer, Snapdeal in July,2017 agreed to
sell its payment wallet Freecharge to Axis Bank for Rs 385 crore, almost 90 per
cent lower than what it had paid for the firm in 2015
• The FreeCharge sale was an important part of Snapdeal 2.0 as that capital
was crucial for the survival of the company
• During the period of September 1, 2017, till October 20, 2017, Snapdeal not
only increased its sales but also increased its net margin by six-fold as
compared to the festive season in 2016
• Further, in its FY17 financials ending in March 2017, Snapdeal claimed to have
reduced its fulfillment cost by 20% and operational losses by nearly 25%