Snapdeal to invest $200 million to improve logistics, train sellers

Mumbai: Snapdeal, India’s second largest e-commerce firm, said it will invest $200 million to build a strong ecosystem for small and medium businesses as it seeks to host 1 million sellers on its platform in the next three years.

A large part of this investment will go towards strengthening Snapdeal’s supply chain services, such as warehousing, logistics, training sellers and assisting them with capital, Vishal Chadha, senior vice-president, market development, said on Sunday.

The company did not disclose whether this would mean more investments could go into its channel partners such as Gojavas, which helps Snapdeal with last-mile delivery.

In March, Snapdeal acquired a 20% stake in Gojavas for ₹ 120 crore and committed to invest another $150-200 million over 12 months in logistics and supply chain.

As large e-commerce firms try and woo consumers by offering the largest selections of goods and services on their platforms, having a strong seller base is becoming crucial for these companies.

Last week, payments processor and mobile marketplace firm Paytm also committed to spend $100 million to help sellers go online.

Delhi-based Snapdeal currently runs two initiatives to support seller enablement and training—Snapdeal Plus, which helps sellers with order management and last-mile delivery warehousing, and Capital Assist, which provides working capital to small businesses.

The $200 million will be largely go into these two initiatives, Chadha said.

Snapdeal has already added 1 million sq. ft of warehousing space and is likely to add another 2 million sq. ft in the next two years. According to Chadha, about 50% of the company’s orders are now fulfilled by Snapdeal Plus.

“This is to help sellers with the necessary infrastructure and help them scale their business. We will continue to work towards empowering the country’s smaller businesses and help them tap wider opportunities and encourage the spirit of entrepreneurship among them,” said Chadha.

The company currently does not charge marketing fees from its sellers for two months or 25 transactions. After that, a seller needs to pay a transaction fee per transaction.

This fee could differ from category to category. There is no registration fee for sellers to list on Snapdeal.

Snapdeal also has a team of over 1,500 people to train sellers to list on Snapdeal. The company plans to add more people to this team.

Separately, Snapdeal said it has already disbursed loans worth $20 million to small sellers through its Capital Assist programme.

Founded in 2010 by Kunal Bahl and Rohit Bansal as a deals site, Snapdeal, promoted by New Delhi-based Jasper Infotech Pvt. Ltd is backed by Japan’s Softbank, Ebay and Blackrock.

The company is also in advanced talks with Taiwan-based phone parts supplier Foxconn Technology Group and Chinese e-commerce giant Alibaba Group Holding Ltd to raise $500-600 million, Mint reported in June.