According to a report by TOI, online marketplace Snapdeal has recorded sales of $3.5 billion this month. The report goes on to say that the company has managed to be capital efficient while utilizing their funds.
The figure of $3.5 billion is the gross merchandise value (GMV) earned by Snapdeal. GMV is a measure of the growth of an online seller. It is the gross amount of sales done, after deducting customer discounts.
Starting as a humble online deals platform in 2010, Snapdeal has come a long way. The company’s meteoric rise compounded by acquisitions and investments by major players has established it as a strong competitor in the field. Snapdeal is slowly inching closer to industry leaders like Flipkart and Amazon with respect to scale of sales.
The report says that the hike is attributed to an increase in merchants’ selling activity. Merchants’ sales have gone up four times in the last month from the same time in 2014. This can possibly be a result of Snapdeal’s new policies for sellers. A new rating policy has heightened the bar for sellers. With an eye at upping the quality, this rating policy urges non-performing sellers to pull up their socks or be prevented from selling. The company has also launched a mobile app for its sellers in July 2014.
According to the details given in Snapdeal’s webpage, it has received funding from different investors. In January 2011, Indian venture capital firm Nexus Venture invested $10 million. In July 2011, US based Bessemer Venture invested $45 million. In April 2013, eBay invested $50 million. In February 2014, eBay invested $133.7 million. In August 2014, Ratan Tata invested an undisclosed amount. In October 2014, Softbank invested $627 million. These investments have helped build the company’s capital.
The TOI report quotes co-founder Kunal Bahl, who says the company has utilised only a portion of the money received. This is possibly a wise move, considering the amount of cash needed by most e-commerce companies on an ongoing basis.
In terms of acquisitions, the company has picked up a handful of companies since its inception. In June 2010, it acquired group buying site Grabbon. In April 2012, it acquired eSportsbuy.com, an online sports store. In May 2013, it acquired Shopo.in. In April 2014, it acquired Doozton.com. In February 2015, it acquired Exclusively.in. In March 2015, it purchased majority stakes in Rupeepower.com. In April 2015, it acquired Freecharge.in.
These acqusitions, coupled with third party investors chipping in spell a sweet deal for the company.
Snapdeal has strengthened its corporate structure by hiring top guns in the top level management in the last few months. Noted alumni from Unilever, Coca-cola, and Bharti Airtel, to name a few have come on board in the marketing, finance, engineering, and customer care departments.
Indicating that it means business, the company’s move to hire experienced hands seems to be a move in the right direction.
Snapdeal has been working on bettering its sales in different ways. It brought actor Aamir Khan on board as its brand ambassador in March this year. Apart from this, festive sales and deals are on to attract buyers. A good chunk of its money has gone into offering its huge discounts and offers.
In late 2014, they announced a tie-up with FINO Pay Tech to set up assisted buying centres in different parts of the country to help the suburban, rural, and low economic sections shop on the site. According to Snapdeal’s blog, it has already launched these centres across the country. The plan is to set up assisted buying centres in 65 cities by the end of 2014-15. It is too early to say if this ambitious project will help bump up the sales or will result in further expenditure for Snapdeal.
Despite reports of losses, Snapdeal seems to be on the right track. It could only be a matter of time before it breaks even. Do you think with its aggressive policies, the sales graph will continue to point northward for Snapdeal?
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