Literally cued in, then the fresh picture is that Snapdeal is snapping at Flipkart‘s heels with the writing on the wall being that – Its sales might even be into the future as compared to its older and better known e-commerce peer.
Snapdeal founder and CEO Kunal Bahl alleged that it would hit $1 billion in sales (or gross merchandise value, as the ecommerce world calls it) in fiscal 2014, a year ahead of target. Flipkart, based on its February numbers, had said earlier this month that it had touched an annualized run-rate of $1 billion, again indicating that the full year 2014 would make certain that the enterprise achieves the landmark.
Bahl held that in 2012 Snapdeal from its barrio had said it would do $1 billion in 2015 calendar. “Now there is a very optimistic chance that we will beat that very significantly. We will be the fastest and the most capital efficient company to hit $1 billion, and by a pretty significant order of magnitude. And this would be very soon,” Bahl purported.
Snapdeal was instituted in 2010, three years after Flipkart, by Bahl and his partner Rohit Bansal. What started as a daily deals site selling meal and spa vouchers soon transmuted into an online marketplace in the year 2011, now offering an assortment of 4 million products from over 20,000 sellers. Of late, the world’s largest digital marketplace eBay coxswained a $134 million (Rs 830 crore) investment in Snapdeal.
Bahl delineated that Snapdeal grew 500% in the last 12 months. He from his end attributed the extraordinary growth to two things. One being the fact that unlike Flipkart, it avoided the expensive model of building its own inventory, and instead created a platform that allowed a retailer anywhere to offer his products to buyers anywhere (rounded off in e-commerce parlance as the marketplace model). Snapdeal from its quarter went on to focus on ensuring efficient delivery. This very model, Bahl maintained, resulted in a much more efficient use of capital too.
Two, it looked beyond India’s major metros, even as most e-commerce firms focused on these centres. “Our hypothesis was a little different. We said we could set aside this 1 million audience of urban elite, and focus on the millions of consumers in Middle India who aspire to buy double door refrigerators and washer-dryer combo washing machines. Today, 50% of our orders come from tier 2 and 3 cities,” furthered Bahl.
Snapdeal accepts as true that large appliances and fashion are important product categories aimed at Middle India. “India is a heterogeneous market and access to products is limited. Though summer hasn’t started yet, we are already selling 250 ACs a day in tier 2 markets. In April, we should be shipping over 25,000 ACs. We are also selling 70-80 fridges and 50-60 washing machines a day,” Bahl rhetoricised.
The space involving Fashion alone is projected to touch Rs 1,000 crore in sales in the next one year. “Over 60% of all units sold on Snapdeal are fashion goods. About 15 months ago, it was zero. It’s just that we sell different things. The fluorescent green Nike shoe that other sites offer, the economics of selling those are worse than selling a mobile phone. About 90% of our assortment is not comparable to any site in India. We don’t focus on brands; we focus on the long tail of other offerings,” Bahl supplemented.
Snapdeal from its part augments a fresh product every 20 seconds on its portal and strategises to have 8-10 million products in its online catalogue by 2014-end. It also plans to double the number of sellers to 50,000 in the same period.
Research firm Forrester approximates that India’s e-commerce market will touch $8.8 billion in 2016; though some say it could be as high as $16 billion by then. The country’s internet users have also risen to 200 million with over 20 million of them transacting online.