After the 100% FDI in ecommerce announcement in March this year that opened up conversation about Indian etailers’ business model, Snapdeal’s co-founder & CEO had said,
“Always a great feeling when you stick to the course that you believe in, pays off: Focusing on a pure marketplace and not doing inventory.”
It was an indirect remark hinting at Amazon and Flipkart that have its own sellers.
6 months later, Snapdeal too has joined the club.
As per news reports, Jasper Infotech that operates the online marketplace has set up a wholesale unit E-Agility Solutions Pvt. Ltd. This unit will be utilized to procure products directly, similar to Amazon’s Cloudtail, Flipkart’s WS Retail & four others, and Myntra’s Vector Ecommerce.
A source revealed,
“The new entity will be largely used to on-board fashion brands that prefer selling goods upfront to e-commerce firms. Also, fashion constitutes 20-30% of Snapdeal’s business and will help abide with the FDI (foreign direct investment) laws. The entity will also be used to fund vendors.”
Jasper Infotech and Snapdeal’s senior VP, Vishal Chadha own E-Agility, as per documents filed with the Registrar of Companies. And several senior Snapdeal managers like Anand Suryanarayanan, Chadha, Saurabh Nigam and Ashish Chandra are listed as the wholesale unit’s directors.
Snapdeal recently splurged a whopping Rs. 200 crores on rebranding project and acquired a new logo, colour theme & tagline. The ecommerce firm is completely focussed on changing its image in the mind of consumers; even if it means spending millions in a time like this when ecommerce investments have dried up.
Can this change in business model, from marketplace to inventory-led, be a part of this image overhaul as well? It appears that the etailer is looking to gain control over inventory (quality & quantity) to improve customer experience.
From a proud pure marketplace, Snapdeal had to change its path and adopt its rivals’ strategy. But will it help to improve its ranking and beat Amazon & Flipkart?
Setting up a wholesale unit may help to get positive customers’ reviews. But it will not be a hit with sellers because it means just like Flipkart, Snapdeal too will divert sales to its own seller.
The etailer has been slowly disappearing from the ecommerce space. Losing out Jabong, Gojavas deals and shutting down Exclusively added insult to the injury. Snapdeal sellers and buyers aren’t too happy with the marketplace.
Will the 200 crores and change in business model help to multiply Snapdeal’s revenue or losses?
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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