BackSnapdeal eyes up to five tech buys this year
Snapdeal is in advanced discussion with two-three firms, according to co-founder and COO Rohit Bansal
Premium
Online marketplace Snapdeal.com, which raised in excess of $1 billion last year from investors including Japan’s SoftBank Group, is eyeing up to five acquisitions in the technology space this year and is hiring specialists from Silicon Valley to reinforce its team to oversee the additions.
Snapdeal, owned by Jasper Infotech Pvt. Ltd, is in advanced discussion with two-three companies, according to Rohit Bansal, co-founder and chief operating officer.
“As a company we are at a fairly acquisitive state of mind today," Bansal said in an interview. “From what we are seeing in the works…we could at least end up doing four to five acquisitions and these might not necessarily be small cheques."
Bansal sees potential targets in the mobile technology space. “We are fairly open-minded about the size of these acquisitions," he added.
Last year was an active one with respect to acquisitions for Delhi-based Snapdeal, which announced five purchases including that of Doozton, a social product discovery technology platform; gifting recommendation technology platform Wishpicker.com; group buying site Grabbon.com; online sports goods retailer eSportsBuy.com and online marketplace for handicrafts Shopo.in.
Snapdeal was in talks to buy Unicommerce eSolutions Pvt. Ltd, an e-commerce management software and fulfilment solution provider, Mint reported in December.
New Delhi-based Unicommerce has a common investor with Snapdeal in Nexus Venture Partners and has also received seed capital from Snapdeal founders Kunal Bahl and Bansal.
In 2015, Snapdeal is expected to spend 60% of its overall budget towards a tech ramp-up that will include acquisitions, top management hiring and for its recently opened development centre in Bengaluru.
There’s no dearth of funds for e-commerce firms like Snapdeal and rival Flipkart that are pumping in capital to build large supply chains, increase their product assortment by adding third-party merchant sellers and fund deep discounts to lure shoppers. Flipkart raised nearly $2 billion last year, while Snapdeal received more than $1 billion
“There is a lot of action in the e-commerce technology space and Snapdeal is responding to it now," said Amandeep Singh Kalsi, vice-president (operations) at marketing consulting firm Absolutdata.
Flipkart, India’s largest e-commerce firm, was planning to invest in or acquire 15-20 companies in 2015 to boost its growth and add technology expertise, Mint reported in December. Flipkart is also looking at aggressively expanding its technology team this year.
Snapdeal till now has been focusing on grabbing new customers and the firm’s technology infrastructure did not match that of its larger competitors. “They (Snapdeal) are making good inroads now," said Kalsi.
Bengaluru is increasingly becoming a hub for the back-end of e-commerce, according to Rituparna Chakraborty, co-founder and senior vice-president at TeamLease, a recruitment consulting firm. “There is a mad rush for employees in niche areas such as Big Data, data analytics and data warehousing," she said. “Companies are also eyeing talent from outside India because no one in India has handled that kind of scale before."
Snapdeal’s development centre in Marathahalli in Bengaluru is expected to employ close to 500 people by the end of the year. The firm is looking to invest close to $100 million in the development centre over the next three years.
This research unit will largely focus on building technologies that will help enhance customer shopping experience by discovering ways of using images as search options and by developing technologies that could improve product recommendations to customers.
Globally, most retailers such as Amazon.com Inc., Tesco Plc, Target Corp. and Wal-Mart Stores Inc. have dedicated teams to analyse customer shopping and personal habits in order to predict shopping patterns.
Snapdeal, too, is looking to ramp up its so-called relevance engineering team that will enhance the recommendation tool for customers and help sellers on its platform predict demand of goods that are likely to generate traction.
“While we continue to grow the customer base, the focus in 2015 will be to enhance consumer experience by making shopping convenient and intuitive," said Bansal.
According to the company, close to 41% of its sales are those of products recommended by it.
“Large scales of consumers are aware of our platform and the next phase of growth is going to come from how we keep engaging with the existing customers," Bansal said.
One of the core responsibilities of the Bengaluru team will be to come up with technologies in the image research space.
“Till now online shopping has been a text-driven experience. With the advent of smartphones, the format of data input is changing. We want to figure out a way where instead of typing your query you can capture it, and image search is one way of it," said Bansal. “No one is doing this right now and this is the reason we have hired senior researchers who could help create patented technology and commercialize it."
Snapdeal, which is looking to hire senior tech experts from the Silicon Valley, eventually wants to set up a tech office in the Bay area.
“It could happen by the end of 2015 or early 2016. “In that case we might look to acquire companies there too, but as of now we are just looking to bring talent from outside India," said Rohit Bansal, who is frequently travelling to the US to meet and hire the right people for the firm.
Snapdeal was founded by Bahl and Bansal as a daily deals platform, selling coupons to groups of customers (similar to the Groupon Inc. model), but converted it into a marketplace in late 2011, first offering services and then adding a wide range of products including apparel, books and electronics through third-party merchants.
A marketplace provides a selling and technology platform to other sellers. Indian law does not allow foreign direct investment in e-commerce, but allows it in marketplaces.
Snapdeal claims to offer close to 10 million products across 500-plus categories on its platform with over 40 million registered users and 100,000 merchants. The company aims to expand its merchant base to one million in the next three years.
Snapdeal, which is backed by investors such as SoftBank, Kalaari Capital and Nexus Venture Partners, posted a loss of ₹ 264.6 crore on revenue of ₹ 168.1 crore in 2013-2014.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
