Snapdeal Making a Comeback Nine Months After Failed Merger Talks with Flipkart

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According to a business newspaper, Snapdeal has doubled its daily orders to 40,000-45,000 from a low of about 20,000 in 2017 and is getting heavyweights of other successful eCommerce companies on its team.

Snapdeal, India’s second largest online retailer, is now on a path of growth.

SoftBank-backed Paytm Mall clocks 50,000-55,000 daily orders, including online-to-offline hyper-local deliveries, and ShopClues, about 70,000, as per analysts tracking the space.

The growth in orders comes as Snapdeal changed its strategy to focus on selling high-frequency, low-price products to price-sensitive customers, instead of on gross merchandise volume (GMV), a proxy for gross sales.

“A strategy not based on GMV but on building a credible business model that can be profitable and have a loyal customer base… means Snapdeal has a good chance of being viewed as an investable property once again,” said Anup Jain, managing partner at Redback Advisory.

Over the past six months, Snapdeal has made several top management appointments, including CFO Vikas Bhasin, who was formerly with Pine Labs and MakeMyTrip.

Several former employees, too, are returning to the company. Topping that list is Prashant Parashar, who is back at Snapdeal after a 16-month stint as CTO of Zomato. Parashar, who previously donned the hat of AVP for engineering at Snapdeal from 2014 to 2016, will now head architecture and key initiatives in the technology team. He will be joined by nearly 20 others across the technology, marketing, business operations, and user growth teams at the AVP, director, manager and engineer levels.

The company’s recovery process still faces several challenges. For one, while order volumes have increased, average order value has halved to Rs 1,000-1,200 from Rs 2,000-2,500 earlier. Average order value for ShopClues is about Rs 800 and for Paytm Mall, about Rs 2,600, as per analysts tracking the space.

Snapdeal targets being profitable and having positive cash-flow by the end of 2018, said the report. To that end, the online marketplace has reduced its assortment of products across low-margin categories such as smartphones and is instead focused on consumables such as general merchandise, apparel, budget phones, refurbished phones and small appliances.

Adopting a focused, lean strategy along with a steady reduction in operational costs has helped Snapdeal lower its monthly cash burn to about $1 million from $8-10 million in 2016 and early 2017.. The company still has cash reserves of more than Rs 700 crore.

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