Snapdeal.com
A BRIEF
COMPANY ANALYSIS
OF
snapdeal.com
bachatey raho!!
By
ANAND PRABHUDESAI
14020448076
MBA EE 14-17 WEEKDA...
Snapdeal.com
Snapdeal.com is the fastest growing e-commerce company in India - HQed in New
Delhi.
The company was started ...
Snapdeal.com
History
Snapdeal.com was started in February 2010 as a daily deals platform inspired
by groupon.com but expan...
Snapdeal.com
Acquisitions
• In June 2010, Snapdeal acquired Bangalore-based group buying site,
Grabbon.com
• In April 2012...
Snapdeal.com
1 out of every 8 internet users in India is subscribed on Snapdeal, and the company is
growing at the rate of...
Snapdeal.com
Working Model
Behl clearly saw that globally, there is an increasing trend towards leveraging a
technology pl...
Snapdeal.com
Company Building & Target Market
SnapDeal believes that basically, there are five key stakeholders in this ki...
Snapdeal.com
Competition & Market Share
The intensity of competition has heightened over the past 2-3 years. And the fight...
Snapdeal.com
With their sights clearly set on the long term, for Amazon, Flipkart and Snapdeal, there
is only one objectiv...
Snapdeal.com
Please note that the revenue figures above are not the price of products sold (GMV), as
these are all marketp...
Snapdeal.com
OPPORTUNITIES
1. Rural Indian untapped market.
2. Tier 2 & 3 Cities focus.
3. MOBILE revolution hitting new f...
Snapdeal.com
Bachate Raho!! Page 12
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SNAPDEAL - Company Analysis w.r.t Strategic Management

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SNAPDEAL - Company Analysis w.r.t Strategic Management

  1. 1. Snapdeal.com A BRIEF COMPANY ANALYSIS OF snapdeal.com bachatey raho!! By ANAND PRABHUDESAI 14020448076 MBA EE 14-17 WEEKDAY BATCH Bachate Raho!! Page 1
  2. 2. Snapdeal.com Snapdeal.com is the fastest growing e-commerce company in India - HQed in New Delhi. The company was started by in February 2010 by Kunal Bahl, a Wharton graduate and Rohit Bansal, an alumnus of IIT-Delhi. A quick SnapShot of Snapdeal.com Type Private Industry Internet Founded 2010[1] Founder Kunal Bahl & Rohit Bansal Headquarters New Delhi, India Area served India Key people Kunal Bahl & Rohit Bansal Services E-commerce (Online shopping) Number of employees 2000+[2] Slogan Bachatey Raho! Website www.snapdeal.com Bachate Raho!! Page 2
  3. 3. Snapdeal.com History Snapdeal.com was started in February 2010 as a daily deals platform inspired by groupon.com but expanded in September 2011 to become an online marketplace. Snapdeal has grown to become the largest online marketplace in India offering an assortment of 4 million+ products across diverse categories from over 50,000 sellers, shipping to 5,000 towns and cities in India, offering more than 6,000 brands across 500 categories. It has 25 million members and adds a new product every 20 seconds. – 2014 data Funding Snapdeal has received 6 rounds of funding: 1. Round 1: In January 2011, Snapdeal received a funding of $12 million from Nexus Venture Partners and Indo-US Venture Partners. 2. Round 2: In July 2011, the company raised a further $45 million from Bessemer Venture Partners, along with existing investors Nexus Venture Partners and Indo- US Venture Partners. 3. Round 3: Snapdeal then raised a 3rd round of funding worth $50 million from eBay and received participation from existing investors – i.e. Bessemer Venture Partners, Nexus Venture and IndoUS Venture Partners. 4. Round 4: Snapdeal received its 4th round of funding of $133 million on Feb- 2014. The 4th round of funding was led by eBay with all the current institutional investors, including Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital all participating. 5. Round 5: Snapdeal received its 5th round of funding of $105 million in May- 2014. The 5th round included investments by Blackrock, Temasek Holdings, Premji Invest and others. The round valued SnapDeal at $1,000,000,000. 6. Round 6: Snapdeal received its 6th round of funding in Oct-2014 from Softbank with investments worth $627 million in fresh capital.This makes SoftBank the largest investor in Snapdeal. Bachate Raho!! Page 3
  4. 4. Snapdeal.com Acquisitions • In June 2010, Snapdeal acquired Bangalore-based group buying site, Grabbon.com • In April 2012, Snapdeal acquired esportsbuy.com, an online sports goods retailer from Delhi • In May 2013, Snapdeal acquired Shopo.in, an online marketplace for Indian handicraft products. • In April 2014, Snapdeal acquired fashion products discovery site, Doozton.com. • In December 2014, Snapdeal acquired gifting recommendation site, Wishpicker.com. • In January 2015, Snapdeal acquired a stake in product comparison website Smartprix.com. Business Results In the year 2012-13 Snapdeal had said that it expected revenues of about 600 crore (US$94 million). Betting big on the growth of mobile commerce, Kunal Bahl, the CEO, said at the time that 15-20 per cent of the sales on Snapdeal came through m- commerce. Snapdeal.com expected the total sale of products traded on its platform to cross 2000 crore (US$310 million) in the fiscal year 2013-14 helped by its robust growth in the past two years and the growing popularity of e-commerce in India. They achieved a growth rate of 400% year-on-year since inception. In June 2014, Snapdeal announced that it had achieved the milestone of 1000 sellers on its platform getting sales of over Rs 1 crore. Snapdeal has 70% market share in the local merchant deals space, and is the largest e- retailer of watches, sunglasses, jewellery, perfumes, among other categories in India, delivering to 3000+ cities and towns in India. Bachate Raho!! Page 4
  5. 5. Snapdeal.com 1 out of every 8 internet users in India is subscribed on Snapdeal, and the company is growing at the rate of 2 million new subscribers per month. Awards • E-Retailer of the Year & Best Advertising campaign of the year - Indian E-Retail awards 2012 organized by Franchise India in Feb,2012. • Winner of Red Herring Asia Awards 2011. • E-commerce site of the year at WAT awards that took place in Jan 2012, Mumbai. • Voted amongst the Buzziest brands of India in afaqs's annual buzz-making poll. Strategic Decision Making In September 2011, Kunal Bahl, took a decision with significant impact on his business – transitioning from a pure online deals site to a full-fledged horizontal e-commerce company via a marketplace model. Such a change was not new to Bahl, as he had started his entrepreneurial journey back in 2007 as a physical discount coupons player and only in 2010, he had pivoted to daily deals. Daily deals comprise only 5 per cent of Snapdeal’s overall business while e-commerce comprises the rest. According to Bahl, all these pivots were a part of considered, strategic thinking, rather than opportunistic or tactical moves. Snapdeal has moved quickly from selling coupon books to deal vouchers online to a product marketplace now. Such quick pivots look more opportunistic than a natural evolution. Bachate Raho!! Page 5
  6. 6. Snapdeal.com Working Model Behl clearly saw that globally, there is an increasing trend towards leveraging a technology platform (rather than owning inventory) and hence his business model is different than the competitions inventory-led model. What Behl says is that the inventory-led model does not necessarily allow you to have much control. There are certain advantages of the inventory-led model but they come at a crazy cost. Inventory is just a very expensive way of marketing and people will often hold inventory to claim that they will ship it fast, and that eventually becomes their marketing claim. Snapdeals’ philosophy is that it will try to be as fast in deliveries as it can. Though there is a huge dependency on merchants & less control, but a merchant will deliver because he realizes that the sales he is getting through SnapDeal platform are potentially impacting his income Integrating vendors with technology is a crucial aspect of the marketplace model. Many a times, vendors are not ready for such integration because they don’t have the resources for it. A marketplace model like Snapdeal needs to ensure that technology integrations work seamlessly and this is what Behl is trying to achieve constantly. The powerful model of local merchant & physical product e-commerce is something which is very unique to Snapdeal.com, and it gives the opportunity to provide wider variety of choice to the customers. Snapdeal is thus a very conservative company in making investments. Company culture is more about how to do more with less. Bachate Raho!! Page 6
  7. 7. Snapdeal.com Company Building & Target Market SnapDeal believes that basically, there are five key stakeholders in this kind of business • Customers • Customer support • Technology platform • Merchants • Logistics. Thier goal is to figure out how to strengthen the linking among these five as each one interacts with multiple of the others. They have around 120 people in thier engineering team and interviewed around 4,000 candidates to build this team. Technology is the single biggest expense in the company. Every line of code in Snapdeal is written in-house as they don’t outsource anything and don’t use other platforms. They believe that If you want to build a fast-moving and agile platform, you need to build it yourself. Their goal is simple - to keep providing the three things, which are important to the customer – Value, Assortment and Convenience. Their approach is very simple – stay lean, focus on important things, and know what your value drivers are and keep working towards them. The company is tapping customers in non-metros and tier-II and tier-III cities; 60 percent of its sales come from these areas, and Snapdeal is hoping to widen its reach. “Urban India has access to offline stores. Our focus is on places where they can’t get the product they desire,” says Kunal Bahl. Bachate Raho!! Page 7
  8. 8. Snapdeal.com Competition & Market Share The intensity of competition has heightened over the past 2-3 years. And the fight for the top slot in the $3.1 billion Indian ecommerce industry has evolved into a three-way tussle: Flush with funds, they are now vying for customer mind space and wallet. But the lack of brand loyalty coupled with the absence of any major differentiators in terms of offerings and services is fast emerging as their biggest challenge. Promises like cash on delivery (COD), assured delivery, no-questions-asked replacement policy, zero cancellation fee, free shipping and EMI options are no longer good enough for customers. Global biggie Amazon Inc, with a $143 billion market cap, entered India last year and is the most deep-pocketed. Bangalore-based Flipkart, with its recent funding of $210 million from Russian firm DST Global Solutions, has now received nearly $780 million in funds since it started operations in 2007. It recently paid $300-330 million to acquire rival Myntra (India’s largest fashion etailer) to strengthen its position in the fashion space. Bachate Raho!! Page 8
  9. 9. Snapdeal.com With their sights clearly set on the long term, for Amazon, Flipkart and Snapdeal, there is only one objective—customer acquisition; while the cost of acquisition is spiraling skyward thanks to their capital-intensive investments. The entry of Amazon has brought an added sense of urgency and competitiveness in the industry, say experts. This is visible in the aggressive advertising in the space. “Spends on marketing and promotion have gone up significantly and communication to the customers is more intense, As Deepak Srinath, director, Allegro Capital Advisors, points out: “Of the three, Flipkart is the strongest brand right now. But in the long term, Amazon will lead over the others on the back of its expertise, technology and access to capital. Amazon does not need to raise capital from outside in the next 10 years.” But the only guarantee that these firms are currently seeking is opportunity. With Nasscom estimating the Indian ecommerce industry will reach $100 billion by 2020, they have that assurance in hard numbers. Bachate Raho!! Page 9
  10. 10. Snapdeal.com Please note that the revenue figures above are not the price of products sold (GMV), as these are all marketplaces, and their revenues come from commissions they get from sellers or listing fees that they charge to list the products on their site. GMV or Gross Merchandize Value represents the price of products sold and net revenue is just a fraction of that! Flipkart leads the race with net revenue of 179 crore followed by Amazon at 168.9 crore and Snapdeal at 154.11 crore. However, when it comes to losses, Flipkart leads by a much bigger margin and their loss for 2013-14 stands at Rs. 400 Crore. Comparatively, Amazon losses are pegged at Rs. 321.3 crore and Snapdeal had least losses of 3 with 264.6 crore SWOT ANALYSIS STRENGTHS 1. Visionary Leadership under Kunal Behl 2. Strategic goal setting and achievement 3. Technology centric company philosophy 4. Out-of-the-box thinking in business line. 5. Good funding received from time to time as company grew. WEAKNESSES 1. Technology led model might collapse if the logistics network is not trained constantly 2. Small time entrants entering into market share end up as competition. 3. Cut throat competition from big rivals like Amazon and FlipKart might end up changing company’s policies and work models. 4. Customers are already finding FlipKart faster by a day or 2 due to its inventory based model. Bachate Raho!! Page 10
  11. 11. Snapdeal.com OPPORTUNITIES 1. Rural Indian untapped market. 2. Tier 2 & 3 Cities focus. 3. MOBILE revolution hitting new figures every year. THREATS 1. Big market players like AMAZON and FLIPKART 2. Threat of Walmart making an entry in India 3. Threat of the world leader in e-commerce Alibaba.com making an entry in India 4. Ever changing tax structures and policies of the government might impact business any day. Revenue Goal for SnapDeal By end of 2015 – 1 Billion USD in GMV is their long term Revenue Goal and going by the current trends, Snap Deal is sure on its path to achieve it !! Till then – BACHATE RAHO !! Bachate Raho!! Page 11
  12. 12. Snapdeal.com Bachate Raho!! Page 12

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