Thursday, 23 April 2015

Snapdeal Main Objective behind Buying Freecharge!

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"Invest ahead of time" is the moto of snapdeal, and proving this statement Snapdeal has acquired online mobile recharge platform FreeCharge for Rs 2,800 crore ($450 million) in cash and stock according to source. Where, FreeCharge offer an online recharge for mobiles, TV & Internet with attractive coupons and deals to its customers. It is the largest buyout so far in the Indian consumer Internet industry. Earlier Snapdeal has acquired small scale companies like RupeePower, GoJavas, etc. Freecharge is its tenth acquisition so far.

But this is one of the biggest deal of Snapdeal with FreeCharge. According to Kunal Bahl, CEO and Co-founder of Snapdeal explained the acquisition of FreeCharge Inspired from Alibaba's online marketplace Tmall, which draws 20% of its merchandise value from mobile recharges. Similarly, he want to target the huge amount of new users who will join the Internet. After this acquisition Snapdeal will be able to gain an additional 20 million Freecharge users apart from the 40 million users it have. Simultaneously, it improves ability to obtain more users frequently at a very low cost, said Bahl. There are many other benefits Snapdeal have for buying FreeCharge.

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Let’s see here how Snapdeal will be benefited by this acquisition:
  1. Everyone knows FreeCharge stand as the biggest platform for online recharge. As People are shifting more towards mobile Ecommerce. We can estimate this by the fact shown that in India the estimate users of mobile Internet is 120 million compared to the Computer who has 100 million only. Hence, with this deal, Snapdeal claims to be the largest m-commerce industry in India.
  2.  Also, Analyst thinks mobile internet users is likely to be expected up to 480 million by 2017 and the number of mobile recharges will go up simultaneously which will surely benefit Snapdeal to acquire more mobile users.
  3. Moreover, Snapdeal will get access to a new set of customers of over 40 million, where Snapdeal has total of 30 million app downloads & FreeCharge have 10 million on play store, which in total a huge amount for any Ecommerce Company. Now, Snapdeal and FreeCharge collectively will make more than 1 million daily transactions with 40 million users on the mobile.
  4. Beside this, snapdeal will now represent strong team of ecommerce members which include people from Freecharge as well. FreeCharge has Kunal Shah, Alok Goel, Rajesh Biyani and many more who have good experience in ecommerce section will now be part of Snapdeal, Which will attract more investors and also play a big role in making this deal successful.
  5. One more very important thing to note here. As, Ratan Tata has invested in Snapdeal and Paytm (FreeCharge Competitor). But now Snapdeal and FreeCharge are joined So, Ratan Tata will invest in 2 tough competitors FreeCharge as well as Paytm, Which again a deal of profit for both the industry.
  6. In addition to this, Snapdeal also have future plans to include services such as education, financial services and utility payments beyond diversifying goods and products to expand e-commerce ecosystem into M-commerce.
Interesting Video showing how Snapdeal will expand e-commerce ecosystem with FreeCharge by livemint.

Lastly, as Snapdeal is the 3rd biggest online shopping site behind Flipkart and Amazon was aiming to sell goods worth $3 billion in 2014-15 according to Kunal Bahl, He also claimed, the deal has potential to turn over the pecking order and promised that the competition is only going to get stronger. Together, Snapdeal and Freecharge expecting to be 1 million transactions per day. This would help the company improve its position in M-commerce world.