Snapdeal gets $500m investment and a $5 billion valuation

According to re/code, the Indian-based e-commerce company has secured a half a billion dollar investment from investors such as Alibaba, the Chinese e-commerce company, and Foxconn, the Taiwanese manufacturer of Apple’s iPhones.

Alongside them was an existing investor, Softbank, which has already pumped $627m into the company last autumn.

Reports of a potential $500m investment were first made in June by the Wall Street Journal.

For Alibaba, the investment represents a first direct foray into Indian e-commerce. The company reportedly wanted to acquire a stake in the company earlier this year, but that never amounted to anything after there was a disagreement over its valuation.

Snapdeal’s model, providing an online marketplace that sells a very wide range of products, puts it directly in competition with Flipkart, a local competitor that is currently valued at an estimated $15 billion, and Amazon, which recently said it is “doubling down” on its Indian business.

The Snapdeal investment therefore intensifies an already highly heated battle. According to Morgan Stanley, Flipkart holds down 44 per cent of India’s $6.3 billion e-commerce market, whilst Snapdeal is in second place with just under a third of the share (32 per cent). Amazon India holds more than half of that with 15 per cent.

It should be noted however, that the latter two companies have disputed these figures. Snapdeal’s CEO, Kunal Bahl, told Business Today that Snapdeal and Flipkart are “neck and neck” in terms of share of the market after Freecharge’s, the online bill payment company Snapdeal acquired in April, revenue is taken in to account.

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