Once one of the shining lights of India’s burgeoning e-commerce sector, troubled start-up Shopclues has now been pushed into merging with Singapore-based Qoo10 in an all-stock deal. The company, which has raised around $250 million so far and was valued at over $1 billion at one point, has not disclosed the valuation at which the merger is taking place, but sources say that it could be as low as $70-100 million.
In a statement on Thursday, Shopclues said that this collaboration presents “new strategic opportunities for both companies as it opens up cross border opportunities for consumers and sellers across Asia”.
The deal comes as a relief to the company which has been gasping for cash in an intensely competitive market.
Qoo10 is an e-commerce platform in South East Asia that serves small and medium enterprises (SMEs) via its localised online marketplaces in Singapore, Indonesia, Malaysia, China and Hong Kong. The Singapore firm also has plans to expand into other Asian countries, for which the merger would come as a significant boost.
The merger will see all of the company’s brands, including Smartship, Momoe and Ezonow, will be part of the merger, since it is Shopclues’ parent company — Clues Network — which is being merged with Qoo10. Clues Network had posted losses of Rs 208 crore for the year ended March 2018.
The company currently has 350 employees as of now and the merger will result in no change in modus operandi for either company, Shopclues added. The merger will also not see Shopclues taken out of the running in the Indian market, especially in the tier-II and tier-III cities it primarily focuses on. “ShopClues branding will continue to operate as-is.
There will be no organisational change, except that we will be better able to leverage each other’s strengths. This is a strategic partnership that will help open up cross-border opportunities for both consumers and sellers of both brands,” it said.
According to Shopclues, more than seven lakh small and micro-merchants from its platform will be able to access the global markets via Qoo10’s presence in South East Asia. “Similarly, Qoo10’s merchants and its cross border logistics business will get access to the large Indian market with their high quality, value-for-money products,” it added.
The merger has been approved by the board of directors and major shareholders of both companies. Shopclues’ struggles had reached a peak earlier this year when it had to sack about 200 people after talks with larger rival Snapdeal fell through.