Indian e-commerce Snapdeal is set to receive financial backing from Foxconn, SoftBank and Alibaba. (Photo : Reuters)
Snapdeal has raised $500 million worth of investments from three powerful technology companies in Asia--China's largest online marketplace Alibaba, Japanese telecom company Softbank, and Taiwan-based contract electronics manufacturer Foxconn Technology Group (Hon Hai Precision Industry), as reported by Chinese newspaper Commercial Times.
Snapdeal.com, India's second largest e-commerce corporation, competes against Flipkart and the Chinese subsidiary of Amazon.com in the field of online shopping.
In Oct. 2014, Softbank had already injected $627 million into the Indian startup. This year, Softbank is said to be participating in the deal again, together with Alibaba and Foxconn; both companies will be investing $200 million each to acquire a 10-percent stake in Snapdeal. Investment amounts were not confirmed by any of the three investors as of press time.
The Indian market in online shopping was worth around $2.3 billion last year, falling far behind China's $180 billion e-commerce market.
However, Kunal Bahl, founder of Snapdeal, believes that India's market has a great potential of outpacing the Chinese market, reaching $250 billion within 10 years, as stated by Forbes magazine.
The Indian e-commerce marketplace has been in constant rivalry with Flipkart and the Chinese Amazon. Last year marked a significant time for the three, as Flipkart revealed that it had scored a $1 bilion investment from Tiger Global, DST Global, Morgan Stanley Expansion Capital, Sofina, and the Government of Singapore Investment Corporation.
This investment was able to raise the market value of Flipkart to $5 billion, followed by Alibaba which also widened its investment portfolio on the Indian market by $2 billion.
To rise to the challenge, Snapdeal has started to work on a new e-commerce network, and has bought Indian companies, such as the mobile recharge service Free Charge, as well as credit card and loan services using Rupee Power.
Snapdeal looks forward to developing a strategic business model that is similar to what Alibaba is using in China, and to turn all of its transactions via the Internet.
