Snapdeal predicted to face losses worth Rs 1500 crore!

snapdeal-losses

This is the eternal paradox of ecommerce success in India. As everyone says online retail is booming in India, online marketplaces keep incurring losses year after year. However, these ‘losses’ should not be taken at face value. These are incurred because of the heavy investments these ecommerce giants are making to expand operations in the country.

Take Snapdeal, for example. According to recent reports, this online  marketplace plans to up its losses five times over, pegging the figure at around $250 million or Rs 1500 crore. This is no blunder by the firm, but instead is a calculated move that is explained by some insider sources.

According to them, Snapdeal is planning to invest about $20 million every month to offer customers aggressive discounts and also to expand their business reach in India. The primary focus on offering discounts to customers to is probably because at the moment, Snapdeal is 30% behind Flipkart and Amazon in terms of GMV. Pumping up the sales could improve the sale figures, though it would entail overall losses for Snapdeal. Snapdeal is presently funded by Japanese corporate giant SoftBank. Having closed at $322 million as sales till March 2014, Snapdeal aims to register a five-fold growth in GMV this fiscal.

Loss or impending profits?

According to experts, the constant flow of funds could increase the heat of competition between the big ecommerce players. However, it is believed that a rich range and variety of products offered will eventually decide the winner. Sunil Wattal, who teaches management information systems at Temple University in the United States explains, “As we are seeing in the last few months, etailing is becoming increasingly competitive in India and fast availability of products (at minimal addition to price) will be the main differentiator.”

Snapdeal has not failed to deliver on that front too. In an attempt to improve product offerings, the company recently acquired fashion apparel and accessories portal exclusively.in and also gift recommendation portal wishpicker.com to improve its product range.

After all, there’s no gain without some serious pain. Snapdeal’s startlingly predicted losses are actually just a precursor to its tremendous growth and plans for a long term profit plan that will unravel as the years go by!

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6 Comments

  1. chetan gupta Reply

    i have discussed with over 15 people
    all had same issues with snapdeal that they do not pay their vendors appropriately and gives def ears to complains
    North indian giants have always gone down in recent past with scams on forehead take it naaptol/yebhi and many more …right time sellers stop selling with them and start reconciliation of accounts

    • Nitesh Khatri Reply

      Hey Chetan,

      You are absolutely right. I was also one of the vendor whose payment snapdeal has not released since 8 months. Now we have stopped business with snapdeal.com.

      Same I would like to suggest to other vendors that stop doint business through snapdeal.com. Their business policies are incorrect or I should say they don’t have any policies in business.

      Beware of snapdeal.com

  2. esellerindia Reply

    Dear Tanya , you are only talking about the 1500 crore loss by snapdeal, what about the 100’s of crores of money that sellers have lost by paying for COD rejected merchandise.
    Forget about GMV snapdeal has the highest amount of COD returns in the ecommerce industry. The 300 odd million of sales that you mentioned in your articles includes the sale of these COD returned articles…..

  3. Tanya Reply

    Hi esellerindia, thank you for sharing your opinion. The views you shared are really interesting, since the usual image created by the media is that there are unscrupulous sellers delivering fraudulent products to customers, the consequences of which Snapdeal has to bear. There has been a lot of talk lately about empty/ fraudulent packages being dished out to customers.

    It’s great to have the voice of a Snapdeal seller shared as well. Maybe the company should rethink its policies and rapoort with sellers.

  4. LP Systems Reply

    Hi,
    To curb this menace we at LP Systems built an application for snapdeal payment reconciliation.

    Some of the features include
    1. Three way payment recon / reconciliation
    2. Sales trends
    3. Detailed and summary recon details
    4. Graphical data representation

    Following are some of the features of the product:

    1. Reconciliation of invoice codes with transaction and bank payment details

    2. Detail about each invoice code and its respective payments, returns, incentives etc

    3. Auto creation of new payment categories as and when provided by market places

    4. Detail and summary of missing payments date range wise

    5. Detail and summary of pending payments date range wise

    and many more…….

    Email: lpbackofficesystem@gmail.com
    Youtube Link: https://www.youtube.com/watch?v=2Cxpq26Te3Q

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