Snapdeal, the e-commerce site has broken growth records in 2011; What next?

Enter Snapdeal’s office in Okhla, and the world seems a wonderful place. There is nothing smashing about the building. It is the vibe: bold red splashed on the walls, rooms named after music bands, quirky posters, glass panels covered with scribbles and 25–year-olds milling around with easy smiles and weighty designations. Of course, at the back of your mind is the net worth of the company: over Rs 1,000 crore. That alone is glamourous. More so, because the company is just 18 months old. Exactly what do they do again?

They sell deals online. And if you don’t get mailers from them about the best bargains of the day, you are not one out of eight Internet users who are Snapdeal’s customers. You are the growth opportunity for the company whose meteoric rise is perhaps bested only by the big daddy of deal-a-day sites, US-based Groupon — a company, incidentally, in as deep trouble as the discounts it offers.

“These days, I often find myself defending Groupon. People forget that for every merchant that cried foul, thousand others built their business through its platform,” says Kunal Bahl, co-founder and CEO of Snapdeal. Groupon is under fire for promising the moon to its vendors who offer bargains with the hope of repeat customers. It is also busy explaining accounting blunders in its books.

“Out here, we keep things real. Both Kunal and I remember that just two years ago, we were selling physical coupons from our office in a basement the size of one of the bigger cabins of the current building. We are paranoid about protecting this now,” says Rohit Bansal, co-founder, Snapdeal.

Starry Rise

‘This’ refers to a business that employs over 800 people across 50 cities. This business is no longer restricted to selling innovative deals. Since four months ago, it is also an online retail company selling shampoos and solitaires. “The response to product retail has been overwhelming. We are already market leaders in watches, sunglasses, perfumes and jewellery categories,” claims Bahl.

Snapdeal’s numbers belong to a business fairytale. This is why, even though the company is not profitable, its success is flaunted as the coming of age of e-commerce in India: a sector that, despite huge potential, has not taken off. Travel portals are the only exception.

“The next three to four years will be fundamentally different. The launch of 4G technology, growth in debit and credit card users and proliferation of devices like tablets will give a huge thrust to online retail. Already many portals have started offering cash-on-delivery services. This should tackle security concerns of internet users,” says Arvind Singhal, chairman, Technopak Advisors.

Yet, the future needn’t be click-happy. There are fundamental issues plaguing e-commerce and Snapdeal is no exception. For one, how will it differentiate services from competitors? Bargain hunters (read: most Indian customers) are likely to switch loyalties to other sites with every better deal they find. And there are plenty of them to choose from: flipkart.com, infibeam.com, crazeal.com, to name a few.

For instance, Indiatimes Shopping says it has made significant investments in technology, warehousing, sourcing and last mile delivery and is on track to hit Rs 500 crore gross market value next year. So what will be Snapdeal’s unique selling point?

Of Assortment and Analytics

“Our biggest advantage is the product and service mix we offer. From spas and fine dining deals to mobiles and bags, such a range is not found on any other coupon site,” says Bansal. The shopping list is expanding rapidly: Snapdeal adds new brands to its shelves everyday.

“Earlier, we were the destination for discretionary expenses. Now from essentials to luxury, customers can come to us for everything. We want to be their first stop before they make a purchase decision. Once customers come to us, we are confident that 80% will make a transaction,” says Sandeep Komaravelly, head, marketing and alliances, Snapdeal.

The portal is relying on its 20–strong analytics team to achieve this goal. It wants to customise deals by assessing the consumption behaviour of each user. “We realise that services, not products, are the proxy for consumption patterns. Let’s say two people buy BlackBerry phones on our site. We cannot predict what either of them wants next.

They could be anyone, from a student to a company executive. But the person who dines at a five-star restaurant shares his background with others who have bought the deal. So when we sell such a service, we have a fair idea what to offer next,” says Bahl.

The company earns almost equal revenue from deals and product retail now, but it is the information from selling discounted services it cherishes most. “Most online retailers have little use for the information they collect from subscribers.

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