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Overview of Snapdeal and its business strategy going forward

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  1. 1. Team CerebrusIndian Institute of Management, Ahmedabad
  2. 2. About Us Akshay Gautam Education: B.Tech Computer Science & Engineering, IIT Delhi Work Experience: IBM ISL 10 Months Summer Internship: Nomura Securities, Summer Analyst - Investment Banking Division Interning with Nomura, Akshay received excellent reviews for his work on pitch-books & projects across M&A, ECM & DCM products in various sectors. As a member of BETA, he was the coordinator for Exchequer – IIMA’s national level finance competition which saw participation from India’s Top 25 B-Schools and managed its Private Capital Event. A super scholar badge recipient at school, Akshay has cleared CFA L2 & full FRM and filed a patent with IBM. Vinay Kumar Education: B.Tech Mechanical Engineering, IIT Delhi Work Experience: BPCL 24 months Summer Internship: Reliance Industries. Corp. Fin Vinay led to major efficiency improvements at BPCL besides launching several initiatives for social benefit. At RIL, he worked on Forex Debt profiling as part of a live project, receiving highest ratings on direct applicability of the work. As project coordinator of the student run consulting body of IIMA, he pitched and closed projects across domains, including PwC and DLF. A scholar badge at school, he is interested in cue sports and Robotics. Siddhartha Bhargava Education: B.Tech Chemical Engineering, IIT Roorkee Work Experience: Royal Dutch Shell 34 months Summer Internship: JP Morgan, Summer Analyst - Investment Banking Division Siddhartha is the secretary (Head) of FII -the student consulting body of IIMA boasting of 35+ live projects by eminent clients like Infibeam and Amazon. He holds the NCC C certificate and was a Convenor of the IIT Roorkee Tech-Fest. Consulting in Europe and Singapore for oil major Royal Dutch Shell has enriched his personality as he has worked face to face with clients of different nationalities He assessed over 100 upcoming Indian companies for potential IB/PE/VC opportunities as part of his stint with JP Morgan investment banking division in Mumbai.2
  3. 3. Overview of Group Buying in India Overview Market Share (July 2011) (2) The number of online buyers has jumped 70%- from 10 million Others to 17 million - while active Internet users have grown by 28% Dealivore 8% to 100 million in 2010 4% SnapDeal Ecommerce business in India is showing resurgence and Livingsocial 27% consumers are not shy of deal sizes that cross `20,000-25,000 7% In June 2011, 4.6 million Internet users in India age 15+ Goat accessed the Coupons category from a home or work 8% computer, reaching 10.4% of the entire online population, which has tripled its audience in the past year, Sosasta led the category with 1.5 million visitors during the month, 11% Dealsandyou followed by with 990,000 visitors and 18% Mydala with 952,000 visitors 17% Too many players How it Works? Low Barriers A customer subscribes with SnapDeal to get daily deal to Entry alerts for coupons Success Immediately The customer click on "Buy” and chooses from several generating payment options – credit/debit cards revenue Consolidation likely The customer receives daily deals and vouchers via SMS Players are and email strong in regions not The customer shows the voucher & redeems it at the pan-India merchant 3 Source: Website and Street Research. 1. ComScore, June 2011, 2. Buzzom, July 2011.
  4. 4. Overview of Overview Key Management (“SnapDeal” or the “Company”) was started Kunal Bahl in Feb 2010 and has growth into one of India’s fastest growing  Responsible for managing strategic vision, key e-commerce websites – ranked among the top 22 websites of business relationships, fundraising and growth India in terms of traffic (1)  Holds an MBA from The Wharton School The Company offers average savings of 50% - 90% at popular Rohit Bahl restaurants, spas, salons, movie theatres, among other leading  Responsible for innovations in technology-backed categories such as sports, weekend getaways. The coupons marketing services and overall corporate strategy bought by customers remain valid for the next 3-6 months  Previously, worked with CapitalOne The Company is now present in 50+ cities in India and enjoys Ankit Khanna 70% transactional market share in the group buying space  Product head and responsible for Business The Company has a network of 5000+ small & large retailers Development, Marketing and Technology across the country, which plays a key role in scaling the service  Holds a Bachelors Degree from IIT Delhi Financials and Projections Recent Investments  Target for the year FY2012 raised Year Transaction & Type Size from `1Bn to `1.5 Bn Revenues 2007 Jasper Infotech – Kenneth Glass US$0.10Mn 2009 Jasper Infotech - NEA Indo US US$1.10Mn  Products business contributes 15% 2010 Jasper Infotech - Indo US US$1.06Mn Products  30% of users access deals on sold mobiles 2010 Jasper Infotech - Kenneth Glass US$0.08Mn (Angel Investor)  5000+ merchants and vendors 2011 Jasper Infotech - Nexus, NEA - Indo US US$7.72Mn Merchants Snapdeal - Bessemer Venture, Nexus 2011 US$35.08Mn Venture, NEA - Indo Us 4 Source: Website and Street Research. 1. EconomicTimes
  5. 5. Competitor Analysis Deals of the day Location Specific Physical Goods Deal Categoriz ation* Visitors (1) 1473 952 990 194 586 Revenue per day 5872 - 507 - 151 (USD) (2)5 1. ComScore June 2011 * Classification of Deals along product categories, for ease of use
  6. 6. Reasons behind the success of SnapDealThe service is inherently viral in nature and that if consumers see value in a service or product, they will buy the coupon Geographic Supplier Strong Online Mobile Physical Goods Presence Network Presence Commerce The Company offers  The Company sells  With a network of  The Company has  Mobile commerce is specific coupons to coupons for over 5000+ online presence via a significant asset customers in specific experience goods merchants, deal Facebook Company, as 30% of cities and coupons for sourcing is better  The SnapDeal its members access This increases the buying branded  Sellers have been Facebook deals on their mobile subscriber base lifestyle products, making requests to community zoomed devices tremendously and fashion accessories, the Company and to 20,000+ in less  The site allows allows SnapDeal to electronics, apparel this has sufficiently than 60 days of customers to target its customers  Plan to foray into reduced the sales opening and now receive daily text effectively selling cars cycles boasts of 140,000+ alerts (or emails); likes hence many The Company  Since its launch  90% of the service customers access provides the products providers who  Customers can deals on the go customers with business has been have been talk about new deals across 50+ doubling each featured on deals they  This will be a big cities in India and month and now benefited from competitive is also planning a accounts for 15% want to use the and also request advantage for the foray of the Company’s service again to deals from the Company going internationally total business attract customer Company forward Market Leader in the Group Buying Category6 Source: TechCrunch
  7. 7. Does SnapDeal stand apart from others? Points of Parity Points of Difference Group buying: The Company essentially offers “deals of the  Mobile Coupons: The website is capable of day” to the customers who register their email ids on the sending Deal SMSes to its customers thereby website  No Tipping Point: Unlike other group buying sites such as Experience Goods: The mentality of Indian consumers Groupon, the Company does not have a floor on the number traditionally has been that they prefer not to buy physical of coupons bought before the deal goes live. Another goods such as eletronicc online but would buy experience advantage is that because there is no threshold for the deals, goods. The Company like many of its clones offers the deal will NOT be canceled by the merchant predominantly experience goods  Foray into Physical Goods: Unlike other clones, the Site Experience: Similar site experience – deals of the day, Company has announced that it has teamed up with Tata by location etc Motors to sell the latter’s car models at a heavily discounted Discounts: Such group buying sites offer similar discounts price on their site, starting with Indica Vista across product categories, thereby appearing as clones to  Pan-India Presence: SnapDeal has expanded across India in customers a very big way since it opened in July 2010. Now it boasts of presence in more than 50 cities across the country Differentiated from other clones in the market 7
  8. 8. Ways to become a dominant player Branding, Building Trust, Technology Integration  Acquire similar clone websites at theRapid Customer Acquisition Merchant Acquisition M&A, Partnerships startup stage to eliminate any competitionImprove Transaction Rate  Case studies which position as a local  Core assets gained from an acquisition are Better user experience such as offering advertising medium: For eg: Selling a local management team and small deals by category/location/radius/locality themed lake cruise in Bhopal subscriber and merchant bases, to which Reward point system  Special focus on movies and restaurants Snapdeal can then apply its expertise, Reviews/blogs and product comparisons resources and brand to scale the business existing  Ability for merchants to self generate deals on the site with proper quality and  Local partners to expand in South 3-D videos and high quality pictures of the Asia/South-East Asian Regions background checks products  Initial focus on distressed inventories of  Partnership agreements with companies User chats, ask for help features etc big retail chains such as eBay, Microsoft, Yahoo and ZyngaIncrease subscribers pursuant to which these partners display, High Degree of personalization  On the ground sales force to complement promote and distribute SnapDeals deals to Refund and product quality validation online marketing efforts by bringing in the their users in exchange for a share of the Accessibility of the site through Face human touch and comfort level revenue generated from SnapDeals’ deals book/Twitter/RSS feeds/Mobile Apps  Target of a million vendors by 2011 end Auto search facilities Marketing BlitzkriegIncrease value per subscriber Launch comprehensive deals in high margin services segment Cross selling Focus on emerging areas like lifestyle 8
  9. 9. Acquisition and Retention Customer Acquisition Merchant Acquisition On the Focus on Heaving ground sales Case studies lifestyle and spending on force: Close of benefits mobile/compu Marketing in to 3000-5000 to ters segment initial days employees merchants needed Vendor Focus on Special focus margins service on Direct TV dependssegments to restaurants/cl marketing upon quality/ increase ubs/movie reviews and margins theatres traffic Free Facility for Coupons on Focus initially merchants Sponsored purchase of on distressed to self Search, portal tablets, inventories of generated advertising handsets Big Retailers deals on the redeemable website on site9
  10. 10. Building a Brand through Technology Integration,Mobile apps, Social Media Social Media Referral program through Facebook/twitter etc Celebrity Marketing through Twitter: Paying SRK to Say that SnapDeal is great Cancellation policy/Refund policy, Return Guarantees RSS Feed, Customized suggestions to customers based upon online history Launch Mobile Apps • Shopping on the go anywhere, anytime: GPS sensors to automatically suggest 1 km radius, same locality deals upon turning on the auto searcher • Convenience for subscribers to redeem deals on a mobile • Voice based apps emulating the Siri on Ipad2 Building trust through technology convergence • Live chat, ask a question, live chat , deal suggestions, deal packages • 360 Degree Video/Pic of products, Redirecting to product comparison sites or blogs • Cancellation policy/Refund policy, Return Guarantees • Cheapest price anywhere guarantee10