Snapdeal, formerly a challenger to Flipkart and Amazon India, is looking to raise around Rs 1,250 crore through the sale of primary shares while the public issue will also have a secondary or Offer-to-Sell (OFS) component included. between Rs 400 and 500 crore.
Japanese investor SoftBank, which made an early bet on the Indian e-commerce company, could offload part of its stake to reduce its stake to less than 25%, sources added.
Snapdeal founders Kunal Bahl and Rohit Bansal are unlikely to sell any shares in the company’s upcoming IPO, people briefed on the matter have said.
For Snapdeal, which started in 2010, a successful IPO would mark a major turnaround after losing to Amazon India and Walmart-owned Flipkart in the race to become India’s leading e-commerce player.
Over the past three or four years, the company has largely focused on selling unbranded products and reducing its monthly cash consumption.
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In 2017, it gave up on a potential merger with its biggest rival Flipkart, which is now majority owned by Walmart.
As it prepares to seek Sebi’s approval for an IPO, Snapdeal has focused on segments such as fashion and electronics with the strategy of selling quality products at affordable prices.
A Snapdeal spokesperson declined to comment.
“They (value-conscious buyers) prefer not to pay for the brand’s premiums, but for what matters to them: a good match with their functional needs, a trendy look and style, quality that lasts. A product that meets all of these needs and that is priced right is value, ”Bahl said in a recent post on LinkedIn.
The company achieves about 80% of its total sales from 1,000 suppliers, but no single vendor accounts for more than 2% of its total sales, Bahl added in the post. 75% of our business comes from regular customers. Over 70% of our sales come from cities beyond Level II and 99% of our orders are from cellphones, he said in the post.
Snapdeal has also created what it calls “strong brands” by working closely with suppliers. These are basically based on searches for products on Snapdeal that consumers are looking for but cannot easily find on the platform. Currently, the retailer owns more than a dozen of these powerful brands which make up around 10% of its total sales.
“With over 70% of our users outside of Tier II cities purchasing affordable products from us, efficient and economical delivery to the breadth and depth of Bharath requires thoughtful and innovative e-commerce logistics solutions,” Bahl said in his article, explaining his logistics platform. UniMove. It allocates third-party logistics players to specific stages of the delivery journey and essentially gives the company better visibility in the allocation and use of resources for logistics.
The company is also setting up offline stores to have an omnichannel presence, a growing trend among internet-focused businesses in India.
Snapdeal, according to sources, has maintained an overall workforce of around 600 to stay lean. The company has had to lay off many people in the past after downsizing and changing focus in 2017.