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Bunch of Deals: Snap Deal*

CASE STUDY, STRATEGIC MANAGEMENT
ET Cases, 10 Pages

Case Preview

Bunch of Deals: Snap Deal

 

On 5th May 2016, Snapdeal made its twelfth acquisition by grabbing TargetingMantra – a marketing technology firm having offices at Palo Alto, California and Gurgaon India. Since starting as a daily deal website in 2010 and adopting the online market place model in 2011, Snapdeal in its journey till date bought out - twelve companies and acquired majority stake in another three. With this string of deals, Snapdeal was able to expand its footprints in various verticals and became one of the major players in Indian e-commerce space though it neither achieved break even nor tasted profits.

Birth of Snapdeal

In 2007-2008, after working with Microsoft1 and CapitalOne2, school friends Kunal Bahl (Kunal) and Rohit Bansal (Rohit) decided to start with their own business. The duo started with an offline coupon business named as MoneySaver in May 2008 and sold 15,000 coupons within three months. Looking at the success of business they decided to expand and started looking for funding. It was then that they met Vani Kola of IndoUS Venture Partners – a venture capital firm3 and after several round of discussions the firm agreed to invest. Many merchants working with them also recommended going online, and thus Snapdeal was born. It came into existence as a daily deal4 website in February 2010.

When on their visit to China in November 2011, Kunal and Rohit were astonished by the rapid expansion of Alibaba.com – the Chinese online market place5 and wanted to replicate the same model in India. Therefore in December 2011, Snapdeal scrapped their daily deals operations and moved into online market place.........


 1 Microsoft Corporation also referred as Microsoft is American based multinational technology company engaged in developing, licensing and selling computer software, personal computers, consumer electronics and services.
2 Capital One is an American based bank holding company dealing in credit cards, home and auto loans, banking and savings products.
3 Venture Capital Firms provides fund in their early or mid-stage to start ups and other small firms which do not have access to equity markets.
4 Daily deal is an e-commerce business model in which a website offers a single product for sale for a stipulated period of time and potential customers registered as members on websites will receive online offers and invitations by email.
5 An online market place is a type of site where the multiple parties can provide product and service information whereas the transaction is processed by marketplace operator.

Teaching Note Preview

Bunch of Deals: Snap Deal

 

Synopsis

The case depicts that with the series of acquisitions Snapdeal was able to expand their footprints in various verticals and has become one of the major players in Indian e-commerce space. This case has been developed with an objective of making students understand about need and thought for acquisitions, inorganic growth and business expansion.

Concepts like selection of targets, types of mergers, post-merger integration, building synergies and due diligence can be taught through this case.

The main focus of the entire case is on Snapdeal’s acquisitions, but neither has the move reached a breakeven point nor earned profits....................

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Abstract

Mergers and Acquisitions (M&A) are strategic moves made by a company for achieving inorganic growth. This path has been followed by many players in varied sectors, viz. FMCG, Pharmaceuticals, Auto and Steel. Indian e commerce companies too have stridden this track in their hunt for growth and market supremacy.

Kunal Bahl and Rohit Bansal started Snapdeal – as a daily deal website in February 2010 and later on moved into an online market place in December 2011. In the journey of more than six years, the firm bought fifteen companies – 12 completely owned and three with majority stake.

Within five months of operations, in June 2010 Grabbon – group buying site was Snapdeal’s first acquisition to start with. After span of two years, the firm bought eSportsbuy – sports good e –tailer in April 2012. Shopo handicraft marketplace was third addition in May 2013. Moving further, fashion product discovery platform Doozton and Whispicker a gifting recommendation portal were purchased in April and December 2014.

In 2015, it took a major stake in an online comparison site – Smartpix in January, thereafter acquired Exclusively.com an online fashion portal in February. Subsequently in March, Snapdeal entered into strategic partnership with GoJavas, a logistic firm and in the same month, picked up majority stake in Rupee Power – digital financial services platform and at the end of the month bought Unicommerce – a unit providing management and fulfillment solution to e commerce. Freecharge an online mobile recharge platform was the biggest consumer internet M&A deal made by Snapdeal in the month of April. MartMobi – mobile technology startup was brought under the roof in a month’s time in May. Letsgomo Labs – Mobility Solution Company was the tenth firm bought in June and Reduce Data was eleventh purchase made in September 2015.

Marking its first buyout in 2016, Snapdeal acquired predictive marketing technology startup – TargetingMantra in month of May.

The case depicts that with the series of acquisitions Snapdeal was able to expand its footprints in various verticals and has become one of the major players in Indian e-commerce space.


Pedagogical Objectives

  • To understand about need and thought for acquisitions, inorganic growth and business expansion
  • To discuss about Snapdeal’s growth over the years and various targets selected for merger
  • To discuss about Snapdeal’s inorganic expansion strategy and whether it is right choice
  • To analyse whether Snapdeal has to change its business model given the competitive scenario

Case Positioning and Setting
The case is appropriate for undergraduate as well as post graduate management students for teaching concepts like Mergers and Acquisitions in Business Strategy Course.


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