Snapdeal Failure Story: How India’s $6.5 Billion E-Commerce King Collapsed To 4% Market Share
Published: 28 July 2026 | By: Team Solution Wire
By 2016, valuation hit $6.5 Billion. Experts said "Snapdeal will do in India what Alibaba did in China".
But just 2 years later, market share crashed from 32% to 4%. What went wrong?
📑 Table of Contents
1. How Snapdeal Started - From Moneysaver to Snapdeal 2. The Golden Era: $6.5B Valuation & Big Funding 3. 3 Big Mistakes That Killed Snapdeal 4. Amazon & Flipkart Effect 5. Losses, Failed Flipkart Merger & Snapdeal 2.0 6. Key Lessons For Startups 7. 10 FAQs1. How Snapdeal Started - From Moneysaver to Snapdeal
September 2007: The story begins with 2 friends - Kunal Bahl and Rohit Bansal.
They started a discount coupon business called Moneysaver. The idea was simple: Go to restaurants, spas, salons and convince them to give discounts. You get new customers.
Reality was different. After months of hard work, they sold only 20,000 coupons.
Model: Customers buy discount coupons online, pay small amount upfront, redeem later for restaurant, movie, spa.
Result: 25,000 deals in first month. Within 1 year, 70% market share in coupons.
2. The Golden Era: $6.5B Valuation & Big Funding
2010-11: E-commerce revolution started. Amazon was expanding beyond books. In China, Alibaba and Taobao were booming.
Kunal and Rohit visited China, saw the model, and came back to India. They shut coupons completely and entered E-commerce marketplace.
Snapdeal's Asset-Light Model:
Instead of warehouses, Snapdeal used this model: Customer orders → Order goes to Seller → Seller delivers to Customer. Snapdeal just did 3 things: List sellers, tie-up with logistics, setup payment gateway.
| Year | Funding & Growth |
|---|---|
| 2011 | $10 Million from Nexus Venture Partners |
| 2012 | 500+ categories, 20 Million customers, 4000 cities. $50M from eBay |
| Feb 2014 | $33 Million funding |
| May 2014 | $105 Million funding |
| Oct 2014 | $627 Million from SoftBank - Biggest ever in Indian e-commerce |
| Aug 2015 | $500 Million more funding |
| 2016 | $6.5 Billion Valuation |
Marketing: "Paise Bachao" campaign, "Bachate Raho". 28 celebrities, 40 TV ads in Diwali 2015. Signed Aamir Khan for ₹15 Crore.
3. 3 Big Mistakes That Killed Snapdeal
Mistake 1: Missed The Smartphone Opportunity
2014-2015: Biggest demand was for Mobiles, Electronics, Fashion.
Flipkart and Amazon quickly signed exclusive smartphone deals with Xiaomi, Motorola, Poco. Every launch brought lakhs of new customers.
Snapdeal ignored this. No exclusive phone launches. No strong identity in mobile category. First big setback.
Mistake 2: Lost In Fashion & Quality Control
After smartphones, Fashion had highest margins and was growing explosively.
Amazon and Flipkart offered huge variety + better quality. Snapdeal lagged in both quality control and product assortment.
Mistake 3: Wrong Execution of Warehouses
To compete on delivery, Snapdeal started building its own warehouses. Goal: Control quality + faster delivery.
But Amazon and Flipkart used Hybrid Model - Keep inventory for some products, rest direct from sellers. Snapdeal failed to achieve this balance.
4. Amazon & Flipkart Effect
Amazon came aggressive. They studied India for 2 years and then launched:
- Fastest Delivery: 8-10 days to 4-5 days
- Focus on Quality Products
- Better Customer Experience
Snapdeal realized discounts alone won't work. They need service too. But by then it was too late.
5. Losses, Failed Flipkart Merger & Snapdeal 2.0
Investors started pulling back. No more billions.
The Failed Flipkart Merger - 2017
SoftBank suggested: Merge Snapdeal with Flipkart for $950 Million.
Logic: Snapdeal can't survive independently. At least recover investor money.
Problem: Just 1 year ago valuation was $6.5 Billion. Now only $950 Million. 85% value loss.
Kunal and Rohit rejected the offer. They believed in comeback. In July 2017, merger was officially cancelled.
The Final Blow: Walmart Enters India - 2018
Walmart bought majority stake in Flipkart for $16 Billion.
Now Snapdeal was not just fighting Amazon. It was fighting Amazon + Walmart-backed Flipkart. Both had unlimited money and experience.
Market share crashed from 32% to 4%.
Snapdeal 2.0 - The Last Attempt
Founders rebranded and switched to Asset-Light Model again. Focus: Tier 2 and Tier 3 cities, Small and Medium businesses.
Result: Losses came down. Business became controllable. But 900 employees were fired. From 1200 to 300 employees.
Was it a comeback? Yes and No. Yes - losses controlled. No - A $6.5B company was almost wiped out.
6. Key Lessons From Snapdeal Failure
| Lesson | Explanation |
|---|---|
| Missed Key Categories | Ignoring smartphones and fashion cost them millions of customers |
| Burning Cash On Ads | 28 celebrities and Aamir Khan couldn't fix product problems |
| Late In Logistics | Amazon/Flipkart built infra early. Snapdeal was late |
| Investor Dependence | When funding stopped, survival became impossible |
📦 20 SNAPDEAL FACTS IN 30 SECONDS
- $6.5B Peak Valuation in 2016
- $1.7B Total Funding Raised
- $627M SoftBank Investment
- ₹1 Cr Sale in 16 Hours
- 20M Customers by 2012
- 4000+ Cities Delivery
- 3 Lakh+ Sellers at Peak
- ₹3,340Cr Loss in FY16
- 28 Celebrities in 1 Ad
- ₹15Cr Aamir Khan Deal
- 32% to 4% Market Share Crash
- $950M Flipkart Merger Offer
- 85% Value Lost
- 900 Employees Fired
- 6 Major Acquisitions
- ₹50,000 Started in 2007
- 600% YoY Growth in 2014
- ₹200Cr Spent on TV Ads
- 8-10 Days Delivery Time
- 300 Employees in 2026
7. 10 Most Asked FAQs - Snapdeal Story
Final Word: Snapdeal's story is a lesson that funding and marketing can't save a business if you miss product and execution. From celebrating $6.5B valuation to struggling for survival - this is how fast e-commerce can change.
1 Comments
why don't you write about current situation.
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