In 2015, Snapdeal acquired Freecharge in $400 million deal to enhance e-commerce ecosystem. Snapdeal management must be patting each other on 8th Nov 2016 when Government of India announced Demonetisation of 500 & 1000 currency bill. The dried out economy coupled with severe cash crunch attracted Indian citizens to experience wallets to do their daily shopping. Many small and medium sized business owner scrambled to enable their payment mechanism attached with digital mode.
India's number 1 wallet company Paytm got the maximum benefit and organic download of wallet application observed humongous increase in downloads.Freecharge is one of the leading digital payment platform and acts as an important role within e-commerce ecosystem too.Being a subsidiary of Snapdeal, the actual download and active user base of freecharge is not known but based on my estimate, freecharge user base must be above 50 million.
In my point of view, freecharge acquisition by Snapdeal will make Snapdeal as formidable player in payment management system. As Snapdeal are always considered as follow up of Flipkart but very soon the scenario will change their course. The immense opportunity attached with digital payment makes freecharge value higher. On one side Indian e-commerce company Flipkart valuations are being marked down whereas it is evident that Snapdeal valuation will go up in coming months.
In my point of view, now Snapdeal can easily fetch $2 bn plus valuation for freecharge subsidiary. The recent announcement by government to promote digital payment mode will make Snapdeal stronger everyday. I won't be surprised if Flipkart kept on focusing in generating higher GMV by discounting whereas Snapdeal continue its path towards profitability in coming few years It's a known fact that Snapdeal may broker a deal to get the higher valuation of freecharge. The days are numbered when freecharge will be driving force within Snapdeal.
0 comments:
Post a Comment