The case focuses on the incredible success of an e-commerce website www. snapdeal. com engaged in providing discounts up to 90% to the members based on the power of group buying and perishable nature of certain services. In a very short span of time, company has registered remarkable growth in business and has also attracted large investments from PE players for further expansions. It has 8 million customers in a matter of 20 months growing at 1. 5 million every month as of now. We identified various strategies followed by the company towards its path of continuous growth & success.
The entire paper is organised into 5 sections- each one focussing on one functional dimension of management viz. Marketing, Finance, Human Resource, Operations and I. T. We have analysed the challenges the company faced in each of these functional areas and how did the company overcome them. Internet commerce industry in India has seen manifold increase in the last couple of years, with the total market size increasing from Rs 19,688 crores by the end of 2009 to an estimated Rs 31,598 crores in 2010. By the end of 2011, the net commerce market size is expected to grow by 47 per cent and touch Rs 46,520 crores.
Comprising about 81 per cent of the total e-commerce in the country, the online travel market, which includes booking rail and air tickets, hotel accommodations and tour packages, is estimated to grow by 50 per cent and touch Rs 37,890 crores by December, 2011. Others such as international air travel (Rs 548 crores), hotel bookings (Rs 308 crores), bus tickets (Rs 294 crores), tour packages (Rs 86 crores) and travel insurance (Rs 52 crores), contributed the balance 9 per cent of the total online travel market.
Another area that has shown significant growth is the financial services market, such as online insurance payments and transactions through trading accounts, which grew from Rs 1540 crores to an estimated Rs 2,000 crores during the one-year period ending December, 2011. 1 Two factors have been among the major barriers to India’s online shopping growth so far are:- Firstly, the Indian consumer mindset is still that of a saver. Given this the Indian consumer would need some coaxing to shop online.
Safety is the topmost criteria. The use of credit cards only took off in the last decade and online banking took incredible amount of marketing by banks. Second is the lack of internet connectivity in India. For a country with a population of 1. 2 billion and a young demographic, internet penetration is at a dismal 100 million, according to some sources. Combined with low credit card penetration, it is not surprising that e-commerce has been slow to take off.
But over the last few years, there has been a quiet e-commerce revolution in India, so much so that global e-commerce heavyweights like Amazon flip kart, etc launched in a big way in the country. A more recent survey by Juxt says that with 4 out of every 5 surfers, shopping online. These numbers indicate that globally, India could be the most attractive e-commerce market, with the potential to explode. Snapdeal is a group buying website started in February 2010, by CEO of Jasper InfoTech Mr. Kunal Bahl. Jasper (www. jasperindia.
com) is a leading marketing solutions provider to majority of banks, telecom and insurance companies in India. It has an experience of more than 10 years in the e commerce space with site named as MoneySaver (www. moneysaverprime. com) Since the day of its inception, Snapdeal has become India’s number one e-commerce site2 and today it has become one of the top 20 websites in India, in terms of traffic3. Snapdeal prides itself in the fantastic experience that it has created for its customers. Reliability and credibility are the two key factors that won consumer confidence in favor of Snapdeal.
Today, Snapdeal has a network of 5000 small and large retailers across the country, and this network plays a key role in us scaling a service like Snap Deal very rapidly. With a current subscriber base of 8 million and growing at a rate of 1 new customer every second, business looks promising for Snapdeal. The company operates in 50 cities in India and has collaboration with over 10,000 brands and retailers across various categories4. Currently there are 3 broad verticals – 1) Branded products & accessories 2) Travel, and 3) Lifestyle services.
Within each of these verticals, there are sub-categories, which deal with a variety of products and services ranging from electronics to dining, health and beauty, entertainment etc. Going forward, the idea is to keep innovating and offer customers a wide array of choices. The business idea is simple. Indian consumers are not price sensitive, they are value sensitive. Everyone here loves to strike a deal, to make a bargain and avail a discount of 50% – 90%. Consumers can purchase this deal from www. Snapdeal. com and then use it anytime in the coming months.
Once the customer completes the transaction on www. snapdeal. com, he/she will get their unique voucher via email and SMS. They just need to show this voucher to the merchant who will validate and redeem it. It is a very simple and frictionless process. Payments are made through credit cards on www. snapdeal. com and once the payment is received, the consumer gets an SMS and an email with a link to easily print his Snapdeal voucher. Typically the validity of the Snapdeal voucher is anywhere in between 1-3 months which gives the customer enough time to use it.
By doing so, Snapdeal helps businesses with high fixed costs to reach their breakeven point faster by acquiring good number of high lifetime value customers. Merchants are willing to give aggressive discounts as they are essentially passing the cost of customer acquisition to the consumer in the form of a discount. Of every deal sold, Snapdeal has a revenue share arrangement with the merchant, which they are very willing to engage in because of the measurable impact it can rapidly create for their business.
For instance, one of the offers from “Donut House” attracted 350 customers in just 4 hrs after which the offer was removed on request of the merchant. This is the kind of impact Snapdeal had on the businesses of its partners. Today, most of its merchant clients recognizes the potential and are coming back with more deals to Snapdeal. Now, the business scenario has turned in favor of Snapdeal. More than half of the deals posted on website are inward requests from merchants.