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Snapdeal - E commerce


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Kirloskar Institute of Advanced Management Studies (KIAMS)

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Snapdeal - E commerce

  2. 2. Latest advertisement December 2015
  4. 4. About us  In February 2010, Kunal Bahl along with Rohit Bansal, started - India's largest online marketplace, with the widest assortment of 12 million+ products across 500+ diverse categories from thousands of regional, national, and international brands and retailers.  With millions of users and 150,000 sellers, Snapdeal is the shopping destination for internet users across the country, delivering to 5000+ cities and towns in India.  With its acquisition of Freecharge in 2015, a leading mobile transactions platform, Snapdeal has become the largest mCommerce company in the country.  In its journey till now, Snapdeal has partnered with several global marquee investors and individuals such as SoftBank, BlackRock, Temasek, eBay Inc., Premji Invest, Intel Capital, Bessemer Venture Partners, Mr. Ratan Tata, among others.  Snapdeal has raised $500 million from Foxconn, SoftBank and Alibaba.
  5. 5. EXECUTIVE SUMMARY Funding  Snapdeal has received 7 rounds of funding:  Round 1: In January 2011, Snapdeal received a funding of $12 million from Nexus Venture Partners and Indo-US Venture Partners.  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.  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.  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.  Round 5: Snapdeal received its 5th round of funding of $105 million in May-2014. The 5th round included investments by Blackrock, Temasek Holdings, PremjiInvest and others. The round valued Snapdeal at $1,000,000,000.  Round 6: Snapdeal received its 6th round of funding in Oct-2014 from Softbank with investments worth $647 million in fresh capital.This makes SoftBank the largest investor in Snapdeal.  Round 7: Snapdeal received its 7th round of funding in Aug-2015 from Alibaba Group, Foxconn and SoftBank with investments worth $500 million in fresh capital.
  6. 6. ORGANISATION STRUCTURE CEO- Kunal Bahl CFO- Anup Vikal COO- Rohit Bansal CP0- Anand Chandrashekhar CFO- Govind Rajan CTO- Rajeev Mangla HOL- Hardeep singh HOBD- Lokesh Mamtani
  7. 7. BUSINESS MODEL OLD MODEL This model is totally different from others in the market, In this model the E-Commerce player does not sell any goods/service on its own but offers discount coupons which can be used by buyers to avail discount at the time of buying Good from Merchant. The original concept is copied from Groupon Pros of Snapdeal Model: 1. E-Commerce player is only Technology Provider therefore very less hassles in business operations…Normally a team of 2-3 sales executives are hired in each city to tie up with brands for discounts 2. Cost of Operations is very Low compared to other models 3. Very Easy to Set Up Business Operations 4. Lot of upcoming Brands / Merchants are available for tie up
  8. 8. Cons of Snapdeal Model: 1. Ultra Low Margin Business: The margin in this business is very thin and can be as low as 25 Rs per coupon 2. Unknown Brands: Normally heavy discounts are offered by brands which are new or not known because they want to build their customer base by offering huge discounts. 3. Discount is available otherwise also: In Most of the cases customer find that discounts are available without buying discount coupon also. 4. Managing coupon logistics is difficult as it require lot of coordination with merchants so that same coupon cannot be used multiple times. 5. Profitable Business only if Huge Volumes can be committed to merchants: Merchants are keen to provide discounts only if high volumes are committed else they find it difficult to manage as front office staff is not intelligent enough to handle or understand this model at merchants end 6. Marketing cost to generate traffic on website is high 7. E-Commerce player should understand the Local Flavour well so that deals are appealing and relevant
  9. 9. New business model  (EBay Model): In this model, the role of E-Commerce player is to bring buyers and suppliers on single trading platform i.e. to create a Mall or Common Market Place. Prominent player following this model is EBay .  Following are Pros and Cons of this Model Pros of EBay Model: 1. Possible to create Very Large Market Place i.e. Large Product Portfolio in terms of One Stop Shop for all requirements. Also customer can select from multiple brands. 2. Ease of Management: EBay’s role is restricted only to manage Technology and Marketing of platform 3. Competitive Rates because of cut throat competition among Sellers 4. Less Capital Intensive i.e. Cost of Operations is very Less i.e. No Warehouse required and Logistics is controlled by Sellers.
  10. 10.  Cons of EBay Model: 1. Low Margins: Margins in this business model is normally between 4%-6% 2. Success of this model is dependent on external partners as EBay can only monitor the quality aspect through feedback mechanism from buyers but cannot really control the same therefore customer satisfaction is not in direct control of EBay which goes against principle of marketing. 3. High Risk in terms of Charge Backs & Disputes by Buyers: With large scale of operation and large no of sellers on board, the customer disputes will bound to increase 4. Many Seller might sell products without Bill/Invoice because of which they can sell at much lower rates though most of them mention it indirectly that product is under dealer’s warranty which implies that product is being sold without paying taxes like VAT etc. and Manufacturer will not cover the product for warranty…
  12. 12. COLLECTION PROCEDURE Cash-on-delivery: The Pros • You get your payment immediately. • There are no additional fees. The Cons • Not many people carry cash anymore. • Cash is easy to counterfeit. • Extra vigilant bookkeeping is required. Credit (and Debit) Cards: The Pros • Credit cards are the most common/preferred payment option. • Accepting credit cards encourages impulse buys. Credit cards can be used to make PayPal purchases. The Cons • Keeping track of all the laws and security precautions.
  13. 13. Online Banking or e-Banking Pros: Secure, receipts automatically generated by banks, convenient and paying with what you have (sensible spending). Cons: Need to have sufficient funds in account and not everyone has an online banking facility.
  14. 14. PAYMENT GATE-WAY  Snapdeal’s payment gateway enables shoppers to save their card details on it, post which they can opt for Klickpay as a payment method in the checkout window. First time users will have to make a Klickpay account or they can also register via Facebook.  It looks like Snapdeal has gone live with its payment gateway solution Klickpay, allowing users to make payments for their online purchases on Klickpay merchant websites. The solution is currently live on Snapdeal wherein consumers can use this option for their purchases.  KlickPay Score: For merchants, it offers features like checkout widgets, payer network, fraud detection and others. But what’s particularly interesting is a Klickpay priority score for each customer, generated from their online transaction history, COD (Cash on delivery) returns, social network influence and others to help merchants separate genuine orders from fake ones and prioritize their shipments. This score is also visible to consumers on their respective profile pages.  Developer accounts opening shortly: Klickpay also notes that it will open developer account registrations shortly. According to the company website, it will support OAuth 2.0 protocol to enable developers offer KlickPay user registrations through a popup. It will also provide two types of checkout integration – a popup form and an iFrame-based embedded form
  15. 15. SUPPLY CHAIN MANAGEMENT  Supply Chain Management is a key function at Snapdeal.  supply chain operations including – planning, warehouse management, driving process excellence, supply chain technology integration, end-to-end solutions design and implementation.  The company is investing $300 million this year to strengthen the same.  Snapdeal entered into a strategic partnership with Gojavas earlier this year. In order to further customer experience on the platform, the companies together launched innovative delivery services like 4 hr delivery, card-on-delivery and 90 minutes reverse pickups.  Snapdeal’s flagship service, Snapdeal Plus has seen tremendous success since its launch a year ago. Currently, 60% of the orders are Snapdeal Plus fulfilled up from 7% in January 2015. The SCM team at Snapdeal is 1000+ people strong and has grown 5 times since December 2014.
  16. 16. SECURITY SOCKET LAYER  SSL (Secure Sockets Layer) is the standard security technology for establishing an encrypted link between a web server and a browser. This link ensures that all data passed between the web server and browsers remain private and integral.  SSL Security is one basic step that every e-commerce site must take at the very minimum. Doing so will at least ensure that transactions between an e-commerce site and its customers remain private. This is critically important in India, especially because a large portion of the population there uses shared internet (i.e. cyber cafes).
  17. 17. PRICING STRATEGY  IDENTIFY top selling products SnapDeal pull an 80/20 manoeuvre and focus in on 25-50 most popular products. For most stores, this should represent roughly 50% or more of your revenue. Optimizing pricing on these items will give them the most bang for buck from a time invested perspective.  Raise Prices They make sure to record all legacy pricing before they go in and change everything up. They dive into your top products and start increasing prices, but with but here are a few rules: (a) Think Incrementally raising prices by 5% to 15%ish is a good rule of thumb for bumping up pricing.
  18. 18. (B) Be More Aggressive With Cheaper Item A 50% increase on a $10 item takes it from $10 to $15 – in nominal terms, the extra $5 often isn’t a deal breaker. However, try raising pricing on a $100 product by 50% and your customers will be much less likely to continue buying. (C) Understand Where they’re At In the Market Spend some time looking at how much the products are selling for on other niche websites, and also be honest with their how professional and trusted their own website is. (D) Re-Investigate Product Pricing They have spreadsheet that lists three columns: current price, cost, and the new price. Seeing all of these items side-by-side will be really helpful as they’re coming up with a new price and will ensure they’re not selling too close to cost.
  19. 19. (E) Using Comparable Test Periods They are now easily able to complete all of the research and execute on the implementation in under a week, if not a day or two. Once you’ve got everything set update their pricing on their live store to start the experiment. They control for (at least a little bit) monthly variations from week to week like people getting paid, being more likely to shop at certain times, etc. (F)Optimizing for Profit / Visitor  To calculate “profit per visitor” simply take the # of site visitors for their test period divided by their total profit for that period. So let’s say we had 50,000 visitors and we made $10,000 in profit. Our calculation would look like this:  $10,000 (Profit) / 50,000 (Visitors) = $0.20 profit/visitor  they now calculate this metric for your control and test periods and use the comparison to judge their experiment.
  20. 20. Measure Your Results  The first thing to do is to create baseline, which they likely have already done. Calculate the profit/visitor for control month – ideally the full month before they changed their pricing. Next, calculate the profit/visitor for the experiment period – again, ideally the calendar month right after your control.  Comparing these two numbers should give them a good sense of how the experiment went.
  21. 21. ADVERISING AND PROMOTIONAL STRATEGY Hitting the right spot! Buy it or not- we believe in doing things the BIG way and exposing it to the wide audience. Buzz and hit the right spot describes our first marketing strategy. Flipkart launched its “Big Billion Day” offer in October 2014, and Snapdeal left no room for others to take its advantage. It introduced its own advertisement along with Flipkart showcasing users the advantage to shop with them.
  22. 22.  It’s close to our heart! And how can we forget the best thing the team did this year. Very close to the heart and special. Since we were planning to do something in our own small way to the society, we thought it was a good opportunity to support a village, where one of our colleagues comes from, by enabling easy access to portable drinking water and the villagers expressed their gratitude by naming the village after Snapdeal!  Uber cool and bold are a few understatements for Snapdeal’s excellent marketing strategies. We know the tricks and techniques of the trade. But going to the ground level and executing it; is really, really tough and so it is more fun!  In short, Snapdeal’s dynamic marketing approach includes doing things the big way and creating the buzz through innovative ways.
  23. 23.  Gul Panag on Discount! Snapdeal created a lot of excitement the last Valentine’s Day with an innovative ‘Date with Me’-Gul Panag campaign. The offer was quite simple, stating anyone can buy a date with Gul Panag at a special price. But, the kind of buzz it created in the market was incomparable.  For promotional activity, Snapdeal used the face of many well-known Bollywood celebrities including Aamir Khan, Pulkit Samrat, Alok Nath and Krishna Abhishek.  You live only once! A sneak peek before I log off – Snapdeal just launched its TVC this week…Take a look at— Yamdude campaign
  24. 24.  ‘Owning the space’ Snapdeal’s next big thing is to hit the outdoors. This year the team came up with a massive Snapdeal banner which stands imprinted on a building in Gurgaon’s-DLF Cyber City. Many thought and still think, that it is Snapdeal’s office! That’s what you call “owning the space” and the “mind”. Quite audacious an attempt since it has never even been tried before by an online portal! Again when Flipkart launched its new advertisement in June 2015, then also Snapdeal nailed it and created its own ad along with.
  25. 25. SOCIAL MEDIA PRESENCE 1. YouTube- 351 videos 2. Instagram- 44.5 k followers 3. Twitter- 260 k followers, 44 retweets 4. Google+ - 9,57,134 followers 5. LinkedIn – 70,175 followers 6. Facebook – 38,95,471 followers 7. Pintrest – 1.8 k followers , 3.8 k pins, 263 boards
  26. 26. Highest share of voice
  27. 27. Thank you