Snapdeal, being a re-organized, focused & entrepreneurial company now facing uncertainties & struggling in operating its business. The reasons behind this fruitful journey to the mess is covered in the below tiny article :
In 2016-17, Snapdeal was struggling in raising funds from the investors but continued spending money on the variable costs which led to Cash Crunch.
Kalaari capital & Nexus ventures are joint ventures (JVs) firms who make funding in leading companies and so as invested in Snapdeal too. SoftBank also was another biggest investor holding 33% ownership. Few months later, partnership between these two biggest investors didn't go well and contradictions were initialized on the basis of Board seats. SoftBank had two seats giving more power & rights in the company. Kalaari and Nexus were holding one seat each.
Storm did not stop here. Freecharge, e-commerce website for recharges, bill payments & much more, owned by Snapdeal was also sinking. Freecharge didn't bother to stop giving offers massively to customers in fear of losing money lenders & transferors. In a few months, the subsidiary reported losses.
To face these difficult times, SoftBank committed to Snapdeal for funding into the company but no such deal was materialized because Snapdeal wanted funding on their own terms (in other words, they wanted flexibility). Sales in the 1st Quarter dropped severely, jobs were cut down and shut Shopo ( Snapdeal's online marketplace for handicraft products).
These continuous shocks were never imagined by anyone.
The Last Lines :~
Snapdeal should have accepted SoftBank's terms & conditions to get the company on track. Giving offers and cashback better than others may deem to be a good business strategy for 'Freecharge' but also they should have taken care of their reserves at the same time. 'Shopo' sales analysis was done late which led to shutting the business at the wrong time.
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