STRATEGIC MANAGEMENT

INDIVIDUAL ASSIGNMENT

QUIKR TO ACQUIRE ZEFO

ABOUT QUIKR
Quikr is an Indian classified advertising platform founded by Pranay Chulet and Jibby
Thomas in 2008. It facilitates the users to buy and sell the goods and services from each other
and schedule the pick-up and payment process by themselves. It currently competes with
OLX and Ebay. Quikr also hosts ads of refurbished products on its platform.

ABOUT ZEFO

This startup was founded by Arjit Gupta, Rohit Ramasubramanian, Himesh Joshi, and Karan
Gupta in 2015. The business is related to making consumers buy or sell the second hand
goods. Zefo also provides the repair services and delivery of refurbished goods. Its operations
are currently present in Mumbai, Delhi-NCR and Bengaluru.

THE STRATEGIC ISSUE

Quikr has been following the acquisition strategy to make its business more strengthened. Till
date, it has acquired 14 start-ups and it includes HDFC Developers, Commonfloor, Babajob,
Hiree, Zimmber and Zapluk. Currently, it is suspected that Quikr is planning to aquire Zefo in
an all-stock deal fashion of approximately $28.5 Mn (INR 200 Crores).

INSIGHTS

As a result of the acquisition, the new-age start-up, Zefo will be largely benefited by the large
customer base that Quikr possesses. This acquisition resonates with Quikr’s philosophy of
transforming into a transaction-based business model. Also, such act will help in
strengthening its position in second hand and refurbished goods market. Zefo will provide the
access to a channel of repair and refurbishing to Quikr which is already lacking. It is working
on the payment and logistics services for second-hand products. From this acquisition, Quikr
will be able to encash the operational efficiencies and capabilities of Zefo in refurbishment
and logistics.

CONCEPT OF ACQUISITION
Acquisition is a situation where one company purchases all or majority of another company’s
share to take over the control on the business. If a company buys more than 50% of the shares
of the target company, it is said that it has been acquired. The acquiring company generally
purchases the assets and stocks which lets them take decisions regarding the assets and stocks
without waiting for an approval by target company’s shareholders.

Need for acquisition-

 Achieving economies of scale

 Greater market share
 Increased Collaboration
 Cost Reductions
 Setting off short-comings
 New niche offerings

Acquisition vs Expansion
Sometimes, for a company to grow acquisition of the operations of an existing company is
more beneficial than expanding your own. The purchased business already has its own set of
labor and management personnel, brand awareness in the market and various other intangible
assets. Expansion, often happens on the cost of efficiencies. There are various reasons
associated to it. The company indulging into expansion may turn it into a bureaucratic one. It
may face physical, logistical or human resource constraints, thus raising the marginal
productivity. Acquisition is also chosen over expansion when the company is facing a large
number of competitors or when a supply of concerned products hikes too much. It helps in
eliminating competition, use of excess capacity etc. A situation, for example, where
acquisition strategy is more appropriate is when the company has to adopt a new kind of
technology in its operations. It will be a cost-efficient step if the company acquires another
company that has already successfully implemented the given technology rather than
spending on internal research and development.

FUTURE PROSPECTS
Talking about the future prospects of the Quikr-Zepho Acquisition, Quikr can build upon the
advantage of a full-fledged logistics and operations team including their speciality in repairs
and delivery services and quality check. And thus can directly compete with companies like
Cashify and InstaCash which are into buying old mobile phones and then refurbishing them.

A report has also stated that online re-sellers space is expected to soar to $48 Bn- $60 Bn by
2022. Also, it is expected that there will be a rise in the share of market re-sellers from the
current 1.2% of the Indian retail market to 5.4%.

References

https://www.investopedia.com/articles/investing/102914/how-mergers-and-acquisitions-can-
affect-company.asp

https://inc42.com/buzz/quikr-denies-talks-of-acquiring-used-goods-marketplace-zefo/

https://tech.economictimes.indiatimes.com/news/startups/quikr-close-to-acquiring-
refurbished-goods-marketplace-zefo-in-all-stock-deal/68360172