Snapdeal trying to reinvent business model
Kolkata: Snapdeal.com, run by Jasper Infotech Pvt. Ltd, is looking to reinvent its fashion retailing business, co-founder and chief executive officer Kunal Bahl said on Monday at the Indian Institute of Management, Calcutta.
Though he did not immediately divulge details of Snapdeal’s plans, Bahl said the current model is unviable and that his marketplace was building new capabilities. “We will not limit ourselves to selling other people’s products only,” he said.
Currently, online marketplaces such as Snapdeal are driven by sales of top fashion brands. “If you are selling brands at a loss, why sell in the first place?” Bahl asked. However, when asked if Snapdeal was planning to launch its own private label, he declined to comment.
Founded six years ago, Snapdeal has raised at least $1.65 billion in funding largely from three key investors: Japan’s SoftBank, China’s Alibaba Group and the Taiwanese Foxconn Technology Group. But lately, SoftBank has written down its investment in Snapdeal.
The marketplace has been looking to cut costs and shore up profitability. Earlier this month, it announced a reshuffle in its top management, consolidating three key functions. The reasons for the tweak, however, were not disclosed.
Like any other marketplace, Snapdeal, too, has for years spent heavily on building a customer base by offering discounts on top brands. Lately, though, it has shifted focus to profitability and has even closed down one of its acquired extensions, Exclusively.com—a marketplace for premium products.
Asked about the impact of demonetization on Snapdeal’s sales, Bahl said cash-on-delivery had taken a hit, but only marginally. Transactions in which customers pay on receiving goods account for almost half of Snapdeal’s sales, according to Bahl.
Earlier on, 70% of sales were concluded with payment of cash on delivery, according to Bahl. It has been coming down, and more people will switch to online payments following the demonetization, Bahl said, adding that the move will benefit marketplaces such as Snapdeal in the long run.
Bahl said Snapdeal will invest $100 million within a year to boost fashion retailing. The money will be used to scale up logistics, technology and partnerships.