FB Pixel no scriptSnapdeal receives fresh funding as comeback kid to rival India’s e-commerce duopoly | KrASIA

Snapdeal receives fresh funding as comeback kid to rival India’s e-commerce duopoly

Written by Priya Pradeep Published on   3 mins read

It finds a new playground in India’s lower-tier markets to tap into first-time e-commerce consumers.

As Amazon increases its grip on the ground and Flipkart still manages to defend its turf, India’s e-commerce rodeo is gradually sliding into a duopoly, leaving other players in the shade with the options of either going after vertical markets or exploring opportunities in the South Asian country’s lower-tier markets. And that’s what Snapdeal has been doing, shifting its focus to tier-2 and tier-3 cities in a bid to leverage new opportunities brought about by its backwaters’ burgeoning internet penetration.

Pushing pass a series of stumbles over the past few years, Snapdeal said earlier this week that it has received an undisclosed amount of personal investment from Anand Piramal, executive director of Piramal Group, an Indian conglomerate. This is the Gurgaon-based company’s first funding since May 2017, when it rejected a takeover from Flipkart. To date, its funding totaled at USD 1.8 billion. Both SoftBank and Alibaba, the world’s largest tech investor and China’s e-commerce empire, are Snapdeal’s investors.

Snapdeal was founded almost ten years ago in 2010 by co-founders Kunal Bahl and Rohit Bansal. At its prime time in 2016 it was valued at USD 6.5 billion. However, as its deep-pocketed rivals, including American e-commerce giant’s Indian unit, and Flipkart, which has raised USD 7.5 billion so far, started shelling out millions for a bigger piece of the pie in the world’s second-most populous country’s budding e-commerce market, Snapdeal has been losing market share to its rivals and lost its way in the race to the country’s e-commerce supremacy.

Amazon was anointed the fastest growing e-commerce firm in India in 2018 by British investment bank Barclays, which says in a research report out last November that the American e-tailer’s Indian operation recorded gross sales of USD 7.5 billion in the financial year ended March 2018, as compared to Flipkart’s USD 6.2 billion of standalone gross sales, excluding the latter’s fashion unit Myntra and Jabong.

Snapdeal’s rejection of the acquisition by Flipkart, a move orchestrated by SoftBank, the two e-commerce players’ common investor, resulted in a slew of remedial moves. These included rampant downsizing, and selling its assets like FreeCharge and Vulcan Express its payment and the logistics units respectively. Its two co-founders introduced a scheme dubbed Snapdeal 2.0 in an effort to resurge the company in the middle of 2017.

The program, as the company explained in its recent funding statement, aims at new opportunities sprouting from the country’s tier-2 and tier-3 cities where millions of news buyers “are starting their e-commerce journeys every month.” Parellely many “small and medium sellers from all parts of the country are looking to establish and grow online businesses to tap this opportunity.” Snapdeal claims that this market with almost 400 million potential buyers is the fastest-growing segment in Indian e-commerce.

The strategy seems to be working. More than 80% of Snapdeal’s users now come from small towns and cities in India. Also, the company managed to reduce its loss by 71% and grow revenue by 73% in the FY19 period.

Snapdeal also claims to have on-boarded more than 60,000 new seller partners who have contributed to over 50 million new listings. At present, it has more than 500,000 registered sellers, who have more than 200 million listings on its marketplace.

After struggling for two years, Snapdeal has come to its feet, only to find the current Indian e-commerce market different from the one it once knew of, what with Amazon and Flipkart having a tighter grip on the market. And also, the regulatory policy the regulatory policy has changed as a result of the introduction of new FDI rules in February 2019, coupled with potential entry of other heavy-weighted players such as Reliance.

In addition to the personal investment from Anand Piramal, the company was also reported to have been in talks with potential investors from the U.S., though nothing is concrete yet. At the same time, local newspaper Mint, citing anonymous sources, said the company is also on the lookout to acquire logistics and investment management startups. Though, a Snapdeal spokesperson denied both accounts.


Auto loading next article...