Snapdeal acquires mobile recharge platform FreeCharge, continuing its aggressive expansion plans to make its offerings more competitive, as the battle to gain customers gets fierce in the Indian e-commerce market.
The Delhi-based e-retailer is reported to have paid ₹2,800 crore ($450 million) in cash and stock to acquire FreeCharge, which is tipped to be the largest buyout so far in the Indian consumer Internet sector, The Economic Times said quoting sources close to the matter.
"We want to target the new tsunami of users who are going to come on to the Internet. This (acquisition) improves our ability to acquire users at a significant velocity at a very low cost," said Kunal Bahl, 32, the co-founder and CEO of Snapdeal.
"Together we represent the largest mobile commerce company in the country now," said Bahl added.
The deal also allows the Sequoia Capital, a major stakeholder in FreeCharge, to make an entry into the online retail sector.
"We have recently invested in multiple marketplaces, where we are shareholders. Tokopedia in Indonesia, Carousell in Southeast Asia, and now we have become a shareholder in Snapdeal. We like marketplaces more than inventory-led ecommerce," said Shailendra Singh, a managing director at Sequoia India.
By acquiring FreeCharge, Snapdeal gains access to payment data of estimated 10 million users on its platform. Also, with a significant growth in the number of buyers transacting on mobile devices FreeCharge gives scope for Snapdeal to increase its customer base.
"The race is about mobile commerce. You have to remember that the pecking order among the Big Three will be very different when it comes to mobile," said Vijay Shekhar Sharma, founder and CEO of Paytm, a rival of FreeCharge, referring to Flipkart, Amazon and Snapdeal.
Apart from products, Snapdeal is now looking at service verticals like education, financial services and utility payments to diversify its range of offerings.
Recently, Snapdeal purchased a majority stake in financial service player RupeePower, an online distribution platform for loans, credit cards and other financial products.
Snapdeal, which has been on a shopping spree after receiving $627 million from Japan's SoftBank Group in November last year, is expected to make more acquisitions worth $1 billion this year.