Five Reasons Why Snapdeal Acquired FreeCharge?

Five-Reasons-Why-Snapdeal-Acquired-FreeCharge?Snapdeal today announced that it has acquired FreeCharge, India’s fastest growing mobile transaction platform.

According to reports, every day 75 million mobile recharges are done in India of which currently only 3 million recharges are done online and this number is bound to increase.

FreeCharge allows users to pay their mobile, DTH and utility payments across most major mobile operators. The company buys bulk mobile airtime from Euronet, Oxigen and others and then sells it to end consumers by offering free coupons along with mobile topups. So, let’s look at the reason why Snapdeal acquired FreeCharge?

First, FreeCharge’s majority revenue comes from mobile and DTH recharge and the company is planning to expand its services in financial service and utility payments in a big way. With this acquisition, Snapdeal has the widest portfolio of mobile commerce range of products and services, including financial services, mobile recharge and utility payments with an exponentially growing user base of over 40 million.

Second, Snapdeal wants to replicate this model and club it along with their existing products thereby giving prospective buyers an edge vis-a-vis other e-commerce companies like Flipkart and Amazon. This will definitely help Snapdeal in the short run as its consumers will get a different experience.

Speaking about the acquisition, Kunal Bahl, co-founder & CEO, Snapdeal said, “The age of monolithic e-commerce platforms is over; it is now time to build an impactful digital commerce ecosystem in India that is multidimensional and inclusive, delivering well defined experiences to consumers. With this game-changing partnership with FreeCharge, we have significantly enhanced our user base and now offer all our customers access to the widest selection of products and services online, making digital commerce an even more intrinsic part of their lives.”

Speaking about the announcement, Kunal Shah, co-founder & CEO, FreeCharge said, “We have been ahead of the curve and as a result, 85 percent of our transactions originate from mobile, these transactions have a very high repeat customer behavior. The partnership with Snapdeal comes at the right time, I foresee this as an opportunity to accelerate our road map in India and reach out to millions of users across the country.”

Third, FreeCharge users are young college going kids vis-a-vis young professionals in the case of Snapdeal. The acquisition helps Snapdeal to help in market expansion vis-a-vis its competitors by targeting young users for selling their products. So, not only Snapdeal enhances its users base bu it also offers customers widest selection of products and services.

Fourth, the focus of e-commerce companies is to increase their revenue so that their valuation increases simultaneously. In this case, according to industry insiders, FreeCharge has an estimated revenue of around Rs 110 – Rs 120 crore per month which translates to an annual revenue of Rs 1,320 – Rs 1,440 crore.

Fifth, the acquisition also help Snapdeal to look at innovative business models both in terms of cross selling and up selling.

FreeCharge will continue to function as an independent platform and all aspects of FreeCharge’s shopping experience will remain intact. The companies will collaborate to offer a seamless shopping experience to customers across both the platforms offering an even wider range of products and services.

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