As per news reports, ShopClues has approached Snapdeal for a possible buyout. ShopClues has not been able to raise any new capital and its cash burn is high. Also, because Snapdeal started to focus on the same market as ShopClues was focused on, Snapdeal has taken a lot of business away from ShopClues, which is causing more burn and losses for ShopClues.
ShopClues posted losses of Rs 347.15 crores in fiscal ’17 while revenue from operations stood at a mere Rs 180.03 crores during the period. Losses in fiscal ’16 were higher at Rs 383.05 crores while in fiscal ’15, the firm reported losses of over Rs 100 crores.
In spite of potential scale, consolidation is going to play out as a theme in most segments of e-commerce. India’s wide and varied demographics, current pace of growth of transacting users and challenges in distributed supply chain continue to result in high cash burn and challenging unit economics. This makes consolidation among players a natural state of play, allowing for bringing together related synergies that will allow these companies to sustain and stay relevant. Since the next phase of growth of users and transactions will arise from Tier II cities and beyond, large horizontal players will increase their attention on these markets, thereby impacting current players which are already focused on these markets.