Shopclues takes a jab at Snapdeal; considering merge & IPO to meet targets

http://www.shopclues.com/

The online retail market isn’t all about private labels and luxury brands. Etailer Shopclues expects non-branded products to take it to ecommerce success. But, after the Flipkart-Snapdeal merger deal fell through, the latter has been focused on non-branded goods too. In fact, during its festive sales, it will concentrate on these kinds of goods to avoid competition from bigger online marketplaces.

Can Snapdeal pull-off non-branded item sales?

Shopclues says:

As a pure marketplace model with its sights on non-branded goods, Snapdeal is being clubbed with Shopclues, which caters mainly to low-income demographics, beyond metros. The latter, however, feels that Snapdeal may not last in this way.

To this Shopclues co-founder, Radhika Aggarwal responded with, “They spent over $2 billion trying to be Flipkart and now they are spending half a billion dollars trying to be like ShopClues. We will have to see where they land up. If it was so easy to become ShopClues everyone else would have done it as well.”

Snapdeal didn’t reply to this comment but a source aware of developments at the company said that the ecommerce company wants to replicate Alibaba Group’s Taobao platform through its Snapdeal 2.0 initiative.

Experts say:

On account of the loss of major market share to Amazon, Flipkart and Shopclues, Analysts are of the opinion that Snapdeal will have a real tough time snatching a sufficient portion from Shopclues too.

“ShopClues is a good brand, especially in smaller cities, and it will be difficult for Snapdeal to break into the space. “(Snapdeal) may be able to leverage their logistics arm, Vulcan, to reach these places very quickly but for customers in smaller towns, a couple of days of wait is not very significant.” RedSeer Consulting engagement manager, Mrigank Gutgutia mentioned.

Currently, the Shopclues buyer base is made up of 65% Tier III and IV customers. Its active sellers have increased from 4,50,000 to 6,00,000 sellers since the last festive season, Aggarwal stated.

During 30 days of the festive season, the online retail platform expects sales volumes of 10 million units. Its Maha Bharath Diwali Sale from September 21st till 28th September will play a major role in pushing these digits.

Shopclues – expansion & profitability

The etailer faces 2 main challenges of dwindling working capital and competition from big etailers. It received its last round of funding 20 months ago according to reports. Chief executive and co-founder of Shopclues, Sanjay Sethi said if investors like Tiger Global lose interest, he is open to merging with another online marketplace or applying for IPO (Initial Public offer) of equity

Regarding merging with another etailer, he said in an interview, “If we look for any kind of financial or strategic help, we will only keep one thing in mind, which is whether it helps us reach our destination faster. I am open to everybody. Why would I not be? The central point is that we should be able to capture the biggest market and the most profitable market of 400 million people who are still on the sidelines of the digital revolution. We are always talking to everyone; it would be unintelligent of me not to.”

 On the other hand, about IPOs he said, “Companies cannot have egos. We have to get to a certain destination; the question is how we go. We can either drive ourselves or hitch a ride. I always look for that answer; for the past four-five years, I have been meeting everyone.”

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