How Snapdeal Survived A Failed Merger With Flipkart—In The Words Of Its Founder
The co-founder and chief executive officer of Snapdeal wrote today how the e-commerce company managed to survive a year and effect a turnaround a little over a year after it rejected an acquisition bid by rival Flipkart.
“We were going to fall off a cliff if a call was not taken immediately to continue to build the business,” Kunal Bahl wrote in a blogpost on LinkedIn titled, “So, how are things now at Snapdeal?”. He said that the uncertainty was costing them money, morale and momentum.
The Japanese investment firm SoftBank—which held stakes in Flipkart and Snapdeal—wanted the competitors to merge and create a larger company that could take on Amazon.com Inc. The U.S. retail giant Walmart Inc. eventually acquired Flipkart for around $16 billion in 2018.
Bahl wrote that their best bet was to go forward as an independent company—with a clear business plan. This led to Snapdeal 2.0, a pure play marketplace, the work on which started many months ago, he said.
For Snapdeal 2.0 to get off to a solid start, employees were the core and the failed merger had hit their motivation. “In July 2017, many team members were barely coming to work for just a few hours a day and I don’t blame them,” he wrote. “They had no clarity about whether or not they would have a job if a merger happened, and as a company, we had been unable to give them that clarity.”
The firm organized one-on-one sessions with employees in the first three months after the failed merger, gave personalised copies of contextual motivational books and monthly newsletters and progress updates went out regularly. “We installed screens all over the office, where live dashboards transparently displayed in real time our progress vis-a-vis targets.”
“We were also acutely aware that given the fragility of the then prevailing sentiment, even a single position being cut would be the proverbial last straw breaking the camel’s back.”
To re-energise culture, the company set up a rewards and recognition for team members who were performing well.
“While we made good progress with optimising costs,” Bahl said, adding focus was also to have cash reserves to execute strategy without the overhang of money worries. For that, it first divested its wallet platform Freecharge to Axis Bank last July, the money for which, Bahl said, came in October. In January it sold its logistics arm, Vulcan Express, to Future Group.
As soon as the firm completed the year of rebuilding, it generated cash in June 2018. “As we exited July’18, we had finished 10 consecutive months of achieving all our goals and despite all the odds, had more than doubled our monthly orders and revenues in the same period,” Bahl wrote.
“From near death to generating cash, from despondency to resurgence—it took a lot of courage, focus and discipline to turn the ship around sharply.”