Japanese group, SoftBank to invest in Snapdeal, biggest single investment in an ecommerce company

Pooja Vishant | Sep 10, 2020

Snapdeal is in the news yet again, but this time it is not about another product category they have introduced or another exciting promotion they are running. Indian ecommerce is catching everyone’s fancy the world-over and Snapdeal has caught the Japanese’s eye.

SoftBank corp, Japanese telecom and media group, will invest $627 million (Rs 3,762 crore) in Snapdeal, which will make it the biggest investor in the Delhi-based online marketplace. Also, this would be the first time such a large investment would be made in an ecommerce business by a single investor.

Utilising the investment

Increasing the number of fulfillment centres is on the cards for Snapdeal to support its expanding ecommerce operations and ease out any operational glitches. Also, Snapdeal plans to capitalize on the fast growing mobile commerce industry with an incubation centre to help mobile technology based startups.

SoftBank intends to strengthen its presence in India and capitalize on its network with internet companies across the world. “India has the third-largest Internet user base in the world, but a relatively small online market currently. This situation means India has, with better, faster and cheaper Internet access, a big growth potential,” SoftBank Corp Vice Chairman and CEO of SIMI Nikesh Arora said.

Co-founder and CEO of Snapdeal, Kunal Bahl, is focused on utilizing the investment to better customer experience on Snapdeal and live up to the promises made, while also helping all the online sellers on their platform to grow in their businesses.

Excerpts from Kunal Bahl’s interview (source: Business Standard)

What does the fresh investment mean for Snapdeal?

I think this is a big endorsement of the focused strategy we have had since the beginning. I have been clear that I want to build the best marketplace in India. This is a testimony to two things. One, how being focused creates good result and how you don’t have to do everything to be successful. Second, a testimony to the purpose of our company, which is to create life-changing experiences for smaller businesses. It is that focus and purpose that culminated into this investment from SoftBank, which I consider the Number One global internet investor.

How do you look at competition from rivals such as Flipkart and Amazon?

In a larger scheme of things, e-commerce is still small. I see our business not as a percentage of retail but a percentage of consumption. Consumption in India is estimated at $1 trillion and 70 per cent of the gross domestic product is consumption-oriented. E-commerce is 0.05 per cent of that and, therefore, the opportunity is phenomenal. As a result, I think no one player can create the market, though I feel only one player would, eventually, be more successful than the others, by virtue of business model, creativity and execution. Clearly we have taken capital as a necessary condition for success. There are multiple players with capital. Now, the question is how to use that money and how to bring in creativity.

But do you pay attention to competition?

Our competition is not going to give us money. Our consumers will. Since end-consumers and merchants give us money, we stay focused on them, to create a million life-changing experiences.

You have been aggressive on new and unique categories, such as home and automobiles. What’s next?

There are more coming. We paused at Diwali. We would announce new categories soon. My view is if a product/service can be bought offline, there is no reason why it can’t be sold online. At the end, a service might be consumed offline but it can be purchased online.

What is Snapdeal’s staff strength and what is your expansion plan?

Our key focus is to increase the engineer strength,. We have about 500 engineers and are looking to hire 500 more in Bangalore in the next six months for the new innovation centre and another 1,000 engineers across the country. Excluding call centres, total employee strength is 1,500. We want to create a great technology company and are hiring globally as well, bringing a lot of talent back into the country. The head of engineering, for example, spent 13 years in the Silicon Valley and has moved back to us. The only capital expenditure in our business is laptops and I don’t want to change that. We don’t have mega office plans, as it is only a cost.

You did not tell us who your competition is—Flipkart, Amazon or perhaps Alibaba?

Anyone who is taking a share of consumers’ pocket and is not on our site is potential competition but I don’t lose too much sleep over that…I lose sleep over who are we not talking to and who can benefit from our platform.

Fair enough Mr Bahl, but now that the biggies like SoftCorp and our very own Ratan Tata are on board with Snapdeal, it will be interesting to watch out for Snapdeal’s scheme of things, and how and if they would make any major changes in the Indian ecommerce space.

About Author

Pooja Vishant

Pooja Vishant

After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!

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