Snapdeal’s 2.0 Avatar is Helping Order Volume Grow Four-fold In The Past 10-12 Months

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Kunal Bahl, Rohit Bansal
Source: India TV

From a valuation of $6.5 billion to a backing by global investors and employing 10,000 at its peak, the Kunal Bahl and Rohit Bansal-led entity has seen it all.

However sources close to the company claim it might be finally getting its groove back, thanks to the plan Bahl and Bansal put in place last year when talks for a sale to Flipkart fell flat.

According to an article in Quartz (May 2018), the Snapdeal 2.0 strategy was first introduced by the company in July 2017 after it shelved talks for a $950 million merger with rival Flipkart. As part of the strategy, co-founders Kunal Bahl and Rohit Bansal, who together own a 6.5% stake in Snapdeal, had decided to lead the company in a ”new and compelling direction” by selling non-core assets and focussing on the core e-commerce business.

The company sold its mobile wallet business Freecharge to Axis Bank for Rs 385 crore ($57 million), and its logistics arm, Vulcan Express, to the Kishore Biyani-led Future Group for Rs 35 crore. Unicommerce Solutions (A warehouse management firm) was sold to Ahmedabad-based e-commerce firm Infibeam for Rs 120 crore ($18 million) in a non-cash deal.

‘Snapdeal 2.0’, is seen to have helped, sources said. In a turnaround of sorts, it has grown its order volume four-fold in the past 10-12 months, from a low of 35,000 daily orders in August last year to now shipping 150,000-175,000 a day.

Also, shifting to a smaller office with around 800 employees, as well as selling off its other companies  have helped it to both run a leaner operation but increase cash in the bank.

“With great pleasure and pride we share with you that Snapdeal was cash flow-positive in the month of June. Simply put, we have achieved the milestone of earning money from our business. This is an incredible achievement for our company and industry, one that puts us on the path to financial independence and freedom to pursue long-term growth on our own terms,” the founders wrote in a letter to the team last month.

FACTS AND FIGURES

800- Number of employees

175,000- Order volumes per day

75,000-100,000 – Number of sellers on the platform

Snapdeal was started on 4 February 2010 as a daily deals platform, but expanded in September 2011 to become an online marketplace.

Source: Prasys’ Blog

In August 2017, Snapdeal changed its business model for a fourth time. The inspiration, as earlier, was Alibaba. It changed from a pure-play marketplace to a Taobao, a consumer-to-consumer e-commerce marketplace. Taobao, founded by Alibaba in 2003, does not charge transaction fees and is free for merchants. It allows the latter to buy advertising and earns revenues from the advertisements posted by them. The Snapdeal co-founders are used to coming up with new business models — mostly to survive.

In eight years, Snapdeal converted itself from an offline deals and discounts entity to an online one. In 2012, it moved to become an online pure-play marketplace.

Last year, it created a new app-based system in which it had a marketplace (Snapdeal) and a host of services, including food ordering, travel booking and bill payments. It all hinged upon FreeCharge.

In between, it tried to follow models such as WeChat to create a chat-based eco-system but those plans fell apart. Thank to the plan, Snapdeal has methodically rebuilt its business over months.

“Instead of focusing on smartphones and electronics, Snapdeal is now focusing sharply on value-conscious customers in the home products, accessories and fashion segments. Its business strategy is to ensure it makes money on each and every order shipped and that any process or product that loses money has been re-examined and optimised,” a source added.

The company has also strengthened its leadership team by inducting a new finance head from MakeMyTrip, a general counsel from Oyo and senior information technology hires from companies like Zomato.

This is as per a report in Business Standard.



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