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The Deal between Snapdeal and Freecharge – A Strategic Choice or Mere Coincidence!

ET Cases, 12 Pages
AUTHOR(S) : Mr. Amit Tripathy- Research Scholar, Dr. N. M. Leepsa- Assistant Professor - National Institute of Technology, Rourkela

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The Deal between Snapdeal and Freecharge – A Strategic Choice or Mere Coincidence!


“Scale is important for a start-up. Think big, but take one day at a time.”1

– Kunal Bahl, Founder and CEO, Snapdeal

In April 2015, Snapdeal acquired Freecharge, a leading m-commerce online recharge platform, for an estimated $400 million (INR2,400 crores). The transaction was 30% in cash and 70% in stock at a $5 billion valuation for Snapdeal. According to Kunal Bahl, co-founder and CEO, Snapdeal, this acquisition would create India’s largest m-commerce portal with mutual customers of Snapdeal and Freecharge. He also claimed that, with this acquisition they have the largest market share and were the largest m-commerce company in India. Flipkart’s acquisition of Myntra in May 2014 was by far the biggest deal for about $330 million. However, Snapdeal surpassed it with its acquisition of Freecharge and made it the largest deal in the Indian E-commerce digital space, following which many start-ups crowding the Indian E-commerce space caught up with the trend of acquisitions for expansion and fund raising. The entire process faced few hurdles at the beginning but after the investors of Freecharge agreed, the deal was soon signed and carried on smoothly...................

Current E-commerce Scenario in India

Though the concept of E-commerce had been prevalent in many countries, it is still very young in India. However, in the past decade (2000-2010), E-commerce had grown rapidly as an emerging industry in India. Depending on the transacting parties involved, E-commerce is classified into four types.............

Snapdeal: A Brief Profile

In 2007-08, Kunal Bahl (Kunal) and Rohit Bansal (Rohit) (school friends) started their own business as an offline coupon company named MoneySaver as the internet was still in its infancy. With great success in the business within three months, they decided that now it was time to think something big. However, they required funds, and they thus met Vani Kohla, a venture capitalist and Managing Director (MD) of IndoUS Venture Partners. After a lot of brainstorming, the company decided to invest in September 2009. About four months later on February 4th 2010, they launched Snapdeal. In a span of six months, Snapdeal came up with 2,000 brands8 and sellers from all across the country...........

Freecharge: A Brief Profile

Freecharge was launched on August 15th 2011 by Kunal Shah (Shah) and Sandeep Tandon (Sandeep). Shah and Sandeep, both knew each other when they were working in a start-up BPO TIS (Tandon Information Solutions) International Inc. Shah was working there as a junior programmer since 2000, while Sandeep joined the company as an investor. They worked together for ten years, and meanwhile, Shah came up with the idea of starting a business, Paisaback in 2009, which was an online cashback coupon-based service. At first, he formed a company called Accelyst Solutions Pvt. Ltd., and under this company launched Paisaback.............

The Deal Between Snapdeal and Freecharge

It is interesting that both Snapdeal and Freecharge were founded in 2010, one in Delhi and the other in Mumbai respectively. In fact, co-founders of Snapdeal Kunal Bahl and Rohit Bansal, and co-founder of Freecharge Kunal Shah knew each other. All the three, in their early start-up’s stage, were in the same business of coupon deals. Kunal and Rohit were running Moneysaver, while Shah was with Paisaback. They were in contact for more than five years before this deal. As Kunal said “we were doing similar businesses and used to talk to each other over the phone.” Earlier to the deal, Freecharge had done business with Snapdeal in various E-commerce campaigns.............

Anticipated Synergies of Acquisition Deal to both the Companies

The deal between Snapdeal and Freecharge offered certain advantages:

Benefits to Snapdeal

• Freecharge had raised new funds, nearly $116 million from24 its investors.
• Freecharge came with a pool of 10 million25 users who transacted on mobile devices, a huge platform for buyers, and there was a chance of converting them to become potential users of Snapdeal.
• ............

Most of the buyers of Snapdeal come from the age group of 25-35 years. But in the case of Freecharge, the group comes down to 15-25 years...............

Benefits to Freecharge

Freecharge would also gain from the deal. Most of the orders, about 70%, of Snapdeal, originate from tier-2 and tier-3 cities, while Freecharge accounts only for 30% of these cities28. With this deal, Freecharge would get a customer base in these cities that may be purchasing products from Snapdeal, but were unaware of the online platform of Freecharge for mobile recharges.................

Post Snapdeal’s Deal with Freecharge: Market’s Action and Reactions

Indian E-commerce industry is still young, and consolidation had been inevitable. Over the few years, Indian E-commerce witnessed a plethora of acquisitions, mergers and even shutdowns. Competition had always been the key to these acquisitions, most important factors being either a desire to increase the product lines or to utilise some untapped potential or simply to raise capital. The acquisition of Freecharge had changed the market scenario, and it seemed like rival companies were getting ready to boost their valuations by acquisitions and funding, the market being in favour of Indian start-ups..........

Road Ahead

The acquisition of Freecharge was a great strategic choice by Snapdeal. According to a report, in 2013 of all the orders Snapdeal had, about 30% were made from the mobile application. This percentage again hiked to 60% in 2014, and it is estimated that in next few years about 90% of the orders will originate from mobile apps. The number of mobile internet users was 120 million in 2015 and was expected to grow to 480 million in 2017...............

Assignment Questions

I. Do you support Snapdeal’s proposal to acquire Freecharge? Why?
II. What is the role played by investors in this deal?
III. .............


Exhibit I: Market Size of E-commerce Industry in India

Exhibit II: Distribution of Products Queries in E-commerce

Exhibit III: Notable Acquisitions in E-commerce in India

Exhibit IV: Comparision Table of Snapdeal and Free Recharge

Exhibit V: Snapdeal’s Honours and Awards

Exhibit VI: Total Funding Received by Snapdeal

Exhibit VII: Acquisitions of Flipkart and Snapdeal in 2015-2016

Exhibit VIII: Market Share of E-commerce Players

Exhibit IX: GMV of Snapdeal and Flipkart

Teaching Note Preview

The Deal between Snapdeal and Freecharge – A Strategic Choice or Mere Coincidence!



The case focuses on the decision of Snapdeal to acquire Freecharge in 2015. It introduces the participants to the trends in E-commerce sector in India and the companies’ positions in the industry. This was not the first acquisition of Snapdeal or any other E-commerce player in the country but certainly was the biggest acquisition so far. Realising the challenges ahead, Snapdeal went on with this acquisition to turn the wheels in its favour against the E-commerce giants Flipkart and Amazon.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The participants should be aware of the competitive strategies adopted by firms for expansion of business. They must have an understanding of Michael Porter’s Five Forces Model and should be prepared with the porter’s model for Snapdeal. For a better analysis of the case, students could be asked to visit the websites of Snapdeal and Flipkart to analyze how they were positioned in terms of customer satisfaction and reviews, user-friendliness, the range of products available, etc.

Case Positioning and Setting

This case study can be used in the MBA program for discussing:

• Corporate Restructuring - Mergers & Acquisitions
• Strategy Courses - Expansion Strategy, Mergers & Acquisitions, and Michael Porter’s Five Forces Model

Assignment Questions

I. Do you support Snapdeal’s proposal to acquire Freecharge? Why?
II. What is the role played by investors in this deal?


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Product code: STG-1-0050, STG-1-0050A


This case study on the deal between Snapdeal and Freecharge enables students to understand whether the decision of the deal was a planned or unplanned strategy – by comparing the anticipated and actual synergy derived from the deal. This case study focuses on two key parts of a strategic corporate restructuring, i.e., the modelling of a firm’s marketing strategy and the outcome of the strategy on firm’s synergy. Snapdeal is India’s largest online marketplace, competing with two other giants in E-commerce market Amazon and Flipkart. The company was co-founded in 2010 by Kunal Bahl and Rohit Bansal. Starting as just an online shopping marketplace, it soon expanded to become the India’s second largest online marketplace after Flipkart1. Today, Snapdeal offers an agglomerate of 10 million and more products across diverse categories, with a brand base of 25 million customers and 150,000 sellers. Headquartered in New Delhi, it has its presence in more than 6,000 towns and cities. With its acquisition of FreeCharge, India’s fastest growing and leading mobile E-commerce platform, in April 2015, Snapdeal had become the largest mobile commerce firm2. Why did Snapdeal chose Freecharge? What were the challenges and opportunities for Snapdeal (internet shopping) to buy Freecharge (internet mobile recharging)? How did Snapdeal’s strategy affect its competitors and what were the competitors’ actions and reactions in post deal situation? Would Snapdeal be able to reap enough benefits to compete with its rivals in the long-run by adopting this vertical integration strategy?

Pedagogical Objectives

  • To understand and analyze the current business dynamics of E-commerce industry in India
  • To study the growth strategy of the market leaders in E-retailing sector with discussion on the strategies adopted by Snapdeal
  • To examine Snapdeal’s competitive strategy through Michael Porter’s Five Force Model
  • To inspect, how Snapdeal’s competitors respond to the deal between Snapdeal and FreeCharge

Case Positioning and Setting
This case study can be used in MBA Program/Executive MBA/BBA –

  • Corporate Restructuring Course – Mergers & Acquisitions
  • Strategic Management Course – Expansion Strategy, Mergers & Acquisitions, and Michael Porter’s Five Forces Model

1 “Case Study: How Snapdeal went on to become India’s top online marketplace from just another coupon website?”,, August31st 2015 (accesed date: February 26th 2017)
2 A. Raghunathan, “Indian Online Marketplace Snapdeal Becomes Largest M-Commerce Player In The Country”,, April 9th 2015 (accesed date: February 26th 2017)

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