Snapdeal, one of India’s biggest e-commerce companies, has scooped up $500 million in funding from Alibaba, Foxconn, and SoftBank, according to Re/code.
The Wall Street Journal first reported in June that Alibaba and Foxconn were in talks to jointly invest $500 million in Snapdeal in June at about a $5 billion valuation. SoftBankwas already Snapdeal’s largest shareholder, having poured $627 million into the company last fall
Alibaba and Foxconn declined to comment. TechCrunch has also contacted Snapdeal and SoftBank.
For Alibaba, Snapdeal would represent a Alibaba’s first direct e-commerce investment in India. The company reportedly wanted to purchase a stake in Snapdeal earlier this year, but talks met a dead end after a disagreement over valuation. It is also supposedly in talks to invest in Paytm, an online payments and e-commerce platform. Alibaba subsidiary Ant Financial already owns a 25 percent stake each in Paytm and rival One97.
The investment would give Snapdeal more fuel in its battle with with Flipkart and Amazon India. The three are engaged in a fierce and costly competition for the lead position in one of the world’s largest and fastest-growing e-commerce markets.
Flipkart holds a 44 percent slice of India’s $6.3 billion e-commerce market, according to Morgan Stanley. Snapdeal is in second place with a 32 percent share, while Amazon India holds 15 percent.
(Amazon India and Snapdeal have both disputed with the figures, with Snapdeal chief executive officer Kunal Bahl telling Business Today his company’s share is “neck and neck” with Flipkart’s when revenue from FreeCharge, the online bill payment platform it acquired in April, is taken into account).
Both Snapdeal and Flipkart want to hone an edge by investing heavily in their in-house logistic networks, which are mandatory for sellers when fulfilling orders made on the platforms (Amazon India, in contrast, lets sellers choose their own shipment method or use Fulfillment By Amazon (FBA)).
In fact, the two rivals have each entered the logistic business by opening up their platforms (Snapdeal’s SafeShip and Flipkart’s eKart) to other vendors, and Snapdeal plans to spend $150 million to $200 million expanding its delivery operations over the next year.
Alibaba founder Jack Ma has said that the company plans to invest more money and time in India. This not only includes taking stakes in Indian companies, but also improving Alibaba’s platorms to target more sellers (who already constitute Alibaba’s second-largest userbase after Chinese SMBs) and hiring more Indian employees.