Snapdeal: Growth levers, Value buying & focus on Tier-II markets
24 December 2021, Mumbai:
Snapdeal 2.0 also focuses on positive unit economics. Fashion, home & kitchen, and beauty & personal care account for 90% of Snapdeal sales. E-commerce company backed by SoftBank group, Snapdeal, which filed for IPO this week, has come a long way since 2017, as it struggled to sustain and also called off sale to its rival, Flipkart.
Soon, it started on the Snapdeal 2.0 journey and focused on its core audience- value-conscious mega segment. Snapdeal 2.0 also focuses on positive unit economics.
Fashion, home & kitchen, and beauty & personal care account for 90% of Snapdeal sales.
Snapdeal’s delivered units have grown 86.3% over the last two quarters from 4.61 million in Q4FY21 to 8.59 million in Q2FY22. Its net merchandise value (NMV) also grew 82.48% over the last two quarters.
The company’s trade receivables for six months ended September 30, 2021, were Rs 12.69 crore and its trade receivables turnover ratio was 38.92.
As more Indians, particularly from Tier-II and III cities are now shopping online, Snapdeal enabled users to buy in their local language. The Snapdeal app is available in different languages to engage with customers. Over 70% of the company’s users are from outside Tier-II towns.
For the six months ended September 30, 2021, 13.07%, 14.45%, and 72.48% of its shipped units were purchased by buyers in metro cities, Tier-I cities, and Tier II+ cities, respectively.
Also, 99% of the company’s orders come through mobile phones. In a blog post earlier this year, Kunal Bahl, Co-founder, and CEO, Snapdeal, said, “Our sharp and exclusive focus on the value segment is evident from the fact that more than 95% of the products sold on Snapdeal are below Rs 1,000. The average selling price on Snapdeal is below Rs 500.”
According to RedSeer, approximately 77% of lifestyle retail demand in India is from the value segment, which represents the total addressable market for players in the value segment. Value lifestyle retail was worth $88 billion in FY2021 and is expected to grow at a CAGR of approximately 15% to $175 billion by FY26.
Commenting on Snapdeal’s recent IPO, Anil Joshi, Managing Partner, Unicorn India Ventures, said, “Pre-2015 Snapdeal was one of the prominent e-commerce players.
The initial success also brought in access to money resulting in many acquisitions.
While growing, the company spent a lot of money on unrelated or non-strategic acquisitions. In 2017, things went the other way and the company saw a downfall including a failed acquisition by Flipkart.”
New Indian Express (The news article has not been edited by DFU Publications staff)
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