Reports indicate that Snapdeal, one of India’s largest e-commerce companies, has received $500 million in investment funding from Alibaba, Foxconn, and Softbank.
As far back as June, there were reports that Alibaba and Foxconn were in talks to invest $500 million in Snapdeal with a $5 billion valuation. Softbank already had a significant interest in Snapdeal, having invested $627 million in the company toward the end of last year.
If the reports pan out, it will be the first time Alibaba has invested directly in the Indian e-commerce market. After a past attempt to invest in Snapdeal ended with the companies unable to agree a valuation, it seems the two parties have now come to a mutual agreement.
Snapdeal is currently competing with the likes of Flipkart and Amazon India for the controlling share of the Indian e-commerce market. India is one of the largest and fastest growing e-commerce markets in the world, and success for any of these companies would serve as a launching pad to other markets. This latest investment will support Snapdeal’s desire to grow its business infrastructure.
As things stand, Snapdeal is the second biggest player in India’s e-commerce market with a 32 per cent share. This is some way behind market leader Flipkart, which enjoys 44 per cent of the share. The e-commerce market overall in India is worth $6.3 billion. However, these figures have been questioned by Amazon India and Snapdeal.
Snapdeal would specifically like to invest in its in-house logistics networks, which are mandatory for orders made via the company’s platform. This differs from other companies, such as Amazon India, which places additional strain on Snapdeal.
Jack Ma, the founder of Alibaba, said the trend for the company is to invest more time and money in India. Ma indicated that this would include investing a stake in existing Indian companies as well as its own business interests.