Snapdeal foraying into media products; Will product sales surpass deals business?

20 Jun, 2012

After selling deal vouchers for 26 months, e-tailer Snapdeal.com decided to foray into product selling last October, offering a variety of non-media products. But this time, the company intends to go deeper into general e-com and will start selling media products like books, music and movies.

Speaking exclusively to Techcircle.in, Kunal Bahl, co-founder and CEO of Snapdeal, said, "Now we wish to enter the media domain, which is at the testing stage. Our ambition at large is to sell everything. Amazon started with books and for us, it had been deals. But slowly and steadily, we will foray into other categories as well."

Snapdeal deals in various products like apparel, mobiles & accessories, watches & bags, electronics & cameras, computers & peripherals, perfumes, beauty & health, footwear home décor, kitchen ware and more. Right now, it operates across 18 categories including the 'deals'. Deal vouchers are sold under spa, salon & wellness, restaurants, entertainment & adventure, travel and the newly launched books section (still at a testing stage).

In case you are curious, 'India's Amazon' Flipkart.com now deals in products across 15 categories, but it doesn't cover 'deals'.

Interestingly, Snapdeal does not consider 'deals' as a separate business. The only difference from mainstream model is how it is delivered. As far as deals are concerned, the vouchers are digitally delivered – through e-mails and via SMS. However, products have to be physically delivered and hence, the last-mile logistics is different; but the buying process is the same. Of late, Snapdeal has also started tracking customer behavior on the site. It identifies consumers by clicking, browsing and buying behavior, and then sends appropriate mailers.

As claimed by the company, it is growing at a rate of 70-80 per cent month on month, with a team of 1,500 on board. It has acquired 16 million registered users and the number is increasing by 1 million every month, according to Bahl. "When we started ramping out our assortment, our e-commerce business started doing very well. And when demand meets supply, transactions starts happening," he added.

Product biz to overtake deals?

According to Bahl, when product sales started last October, the company was doing a few hundred shipments for the first few months. But now it does 20,000 transactions (excluding deals) every day. With the media categories to be introduced soon, the e-tailer intends to double the transactions and targets Rs 600 crore in overall business in FY2012.

The products biz is bound to surpass the deal business though, since products sold across 20,000 pin codes in India will generate more cashflow than the deals business, limited to a few cities.

"Sustainable assortment is our key to scalability. We are building the organisation by putting the right kind of people at the right place and using the right technology at the right time," explained Bahl. "Moreover, our customers wanted us to sell other things. They came up to us asking for products and we did it," he added.

Of consolidations and beyond

Snapdeal recently acquired eSportsBuy.com, an online retailer of sports and fitness equipment and accessories. It was the company's first acquisition till date and eSportsBuy.com was shut down after a month (it's just another episode similar to Flipkart-Letsbuy and one wonders if pruning competition lies at the core of such acquisitions).

Ask Bahl and he observed, "Consolidation is a natural cycle of life. Ultimately, the fittest and the smartest of them all would survive."

Currently, the company is in talks with a couple of other firms that it would like to acquire. "In fact, we are looking at all possible companies across the board including vertical and horizontal e-commerce portals and pure play tech companies," said Bahl.

While looking at acquisition, the Snapdeal team keeps two things in mind. At least 90 per cent of the weightage is given to the team and the rest 10 per cent on the kind of business it is in. "A good, enthusiastic team willing to work with us in an entrepreneurial manner is always welcome. Right now, the market is a bit choppy and it is better for businesses to align with bigger players where they have complete freedom and some medium-term goals," noted Bahl.

According to him, the Indian industry is not mature enough to run parallel businesses. "It can be disastrous as there are two different cultures involved and it is hard to build up a homogeneous culture in that scenario. Moreover, it is difficult to build consumer trust for one brand; so it will be even tougher for multiple brands," he concluded.