Snapdeal’s sales expected to cross $1 billion this year in India

Following closely on the heels of competitor Flipkart, Snapdeal is expected to cross the significant milestone of $1 billion in sales this year a year ahead of schedule.  In 2012, Kunal Bahl, founder and CEO of Snapdeal had predicted sales to touch the $1 billion milestone in 2015. Once achieved, Snapdeal will be the fastest and most capital efficient company to have achieved this at a significant scale.

Started as a daily deals site in 2010 dealing with meals and spa vouchers, Snapdeal soon evolved into an online marketplace in 2011. This proved to be a turning point and it deals with around 23,000 online retailers currently who sell their products through the Snapdeal platform. eBay recently invested Rs 830 crore in it fuelling more progress and developments to fasten its pace of success.

Reasons for Snapdeal’s success

Snapdeal grew by around 500% in the last year, the reasons for which are:

• It adopted the marketplace business model, by which it provided a platform for retailers from anywhere to offer products to buyers anywhere. This helped to avoid expensive costs involved in building own inventory.

• It focused on logistics and efficient delivery to customers. This helped in better utilization of capital and also ensured maximum customer satisfaction which is the most important parameter for an online retailer’s/marketplace’s success.

• Instead of focusing on the major Indian cities, it focused on the tier 2 and 3 cities, the people of which also aspire for products like double door refrigerators and latest washing machines but did not have access to them. Due to this approach, Snapdeal today is backed by 50% sales from tier 2 and 3 cities alone.

• Snapdeal’s model of operation is such that a new product is added every 20 seconds. At this rate, about 8-10 million products are expected on Snapdeal by the end of this year.

Expected growth for Snapdeal this year

• Snapdeal focuses on large appliances and fashion for the tier 2 and 3 cities, recognizing that access to these products is limited for people from these cities. Tier 2 markets have registered sales of 250 ACs already this year despite summer season not having started yet. 25,000 ACs are expected to be sold in April alone. Additionally, 70-8- fridges and 50-60 washing machines are a sold a day currently.

• Snapdeal plans to double the number of sellers to 50,000 this year which would enable more product offerings at competitive rates.

• Sales from fashion products are expected to be Rs 1,000 crore by the end of this year. About 15 months back, Snapdeal did not have any sales in fashion. However, with different product offerings as compared to other sites with focus on variety of products rather than on brands, sales from fashion products have increased to 60% of total sales.

Benefit for Indian online sellers with Snapdeal’s growth

Snapdeal’s growth indicates growth of Indian ecommerce as well. With the rise in the number of internet users, Indian ecommerce is predicted to touch sales of $8.8 billion in 2016 and some have even predicted it to be as high as $16 billion.

The growth of marketplaces like Snapdeal indicates better opportunities for associated online retailers in terms of wider customer base and more effective marketing.