The deal has been approved by the directors and major shareholders of Shopclues, the company said. People aware of the matter said the deal value is lower than $100 million.
“This partnership presents new strategic opportunities for both companies, as it opens up cross border opportunities for consumers and sellers across Asia,” Shopclues said in a statement. Qoo10 could not be immediately reached for a comment.
The company did not disclose the terms of the acquisition, but sources said company co-founder Radhika Aggarwal might exit the company in the coming months. Shopclues’ other co-founder Sanjay Sethi may continue for a longer period for the transition of the business with the new owner of the company, which has presence in Singapore, Indonesia, Malaysia, China, and Hong Kong. Shopclues termed Aggarwal’s exit talks as speculation.
“Both brands will continue to operate as is. There will be no organisational change, except that we will be better able leverage each other’s strengths,” the company said in response to TOI’s query. In July, as reported by TOI, the company had fired about 50% of its workforce, coming down to about 200-250 employees. Shopclues said it has 350 people and there will be no changes in its modus operandi.
For Shopclues to be sold at a fraction of its peak valuation, it would mean its investors are not making any returns on the investment either. This is similar to online fashion retailer Jabong, which was sold to Myntra for $70 million in 2016. As per reports, Amazon had considered buying Jabong for around $1 billion in 2014.
For Shopclues, the writing on the wall has been there for over a year now. It was unable to raise new capital while it was running out of cash. It has been getting small amount of capital from existing investors to sustain day-to-day operations. This forced the company to explore potential merger with Gurgaon-based rival Snapdeal.
It did not go through owing to multiple pending liabilities on the former’s balance sheet, including tax and money it owes its vendors besides a significant fall in number of orders, TOI reported in June. Shopclues had also explored similar talks with Paytm Mall but those did not work out either.
Shopclues’ distress sale, once again, marks the dominance of larger e-tailers like Flipkart and Amazon who continue to have lion’s share of the e-commerce market. Vertically-focused etailers have also struggled to scale up as they faced intense competition from the likes of Amazon and Flipkart.
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