Softbank reportedly wants to merge India's top online retailers to take on Amazon

Japanese telecom giant and startup investor, Softbank, wants India's top two online retailers to join forces to fight Amazon in the country.

Softbank is reportedly "orchestrating" a merger between Flipkart, India's biggest online retailer, and rival Snapdeal, and could possibly have a deal by the end of next month.

Interestingly, Softbank is the largest investor in Snapdeal with a 30 percent share.

Snapdeal though is struggling to survive in the face of stiff domestic competition, especially after the aggressive expansion of Amazon which is now the second-biggest online retailer in the country.

It has been in talks with various domestic rivals for a possible merger. Snapdeal even considered merging with Alibaba-backed Paytm, according to reports. The Chinese internet giant is an existing investor in Snapdeal too.

Not only Snapdeal, but even Flipkart is feeling the Amazon heat.

Most recently, it was reportedly in talks to acquire eBay's India business as part of a $2 billion fund raising that saw investments from Tencent and Microsoft. The online retailer has been devalued by Morgan Stanley twice in quick succession and is now valued at a mere $5.37 billion from $15.2 billion in 2015.

Softbank, meanwhile, is looking to invest about $1.5 billion for a 15 percent share in the Flipkart-Snapdeal combine, the Times of India report added. If and when the new entity comes about, it would be Amazon's primary competitor in India.

Last year, Amazon’s gains had come at the expense of Flipkart and Snapdeal’s market share in the $15 billion online retail industry. Currently, the Jeff Bezos-owned internet giant is doing a business of about $4 billion and is the No. 2 in India after Flipkart.

India is a particularly important market for Amazon, especially after its failure in China. "Success in India means that Amazon’s retail model can work outside of ‘traditional’ markets in North America and Europe, and helps provide better visibility in how Amazon can continue to grow for many years in the future," a San Francisco-based analyst was quoted as saying.

Mashable has reached out to Flipkart and Snapdeal for comment.