Online retail player Flipkart may have to brace itself for competition in the area that it is known best for – books. Snapdeal.com, a ‘daily deals’ e-commerce company spanning categories like apparels, gizmos, dining, travel and spas, may soon take a call on the media space, that includes books, music and movies. Rival Flipkart began as a books major and then diversified into other areas, digital music being the latest.
While the two companies follow different business models, their current revenue and sales projections are similar. Both are chasing the magic figure of $1 billion in sales in the next two to three years. But, even as Flipkart has maintained it has no sell-off plans, Snapdeal is candid about exiting the business at the right time.
“Media is an interesting category, and we are not in it. But we are thinking about it now,” Snapdeal founder and CEO Kunal Bahl told Business Standard. He added the company was looking for the right model and would take a call soon on entering the books and music space. According to Bahl, the books business is a big money loser, and the company stayed away from it till now because it’s a “conservative organisation”.
Flipkart could not be contacted for comment on the competition that Snapdeal may pose if it chooses to enter the media space. To a query on facing competition from the likes of Flipkart, Bahl said, “We don’t spend much time looking over our shoulders”.
Snapdeal, a barely two-year old company, pegs its current revenue at Rs 500 crore and projects sales worth $1 billion (roughly Rs 5,100 crore at the current forex value) by the year 2015. Flipkart, that had gone live in 2007, has crossed the Rs 500-crore mark in revenue in 2011-12, and is looking at clocking $1 billion ahead of the 2015 deadline that it had set for itself, as CEO Sachin Bansal had told this newspaper recently.
Even as Snapdeal is exploring stock market listing opportunities, Bahl says, “For us, listing is just a financial event. We are much more focused on the $1-billion target”.
The execution of the decision (to list the company) is likely around 2014. “Eventually, we would look at exiting like any responsible entrepreneur,” Bahl said, adding that the company was “not in a hurry” to sell. Bansal of Flipkart had, however, said that selling the business was not part of the company’s future plans, and had spoken of building Flipkart as the largest retailer (not just online) in the country.
Snapdeal is a discount platform for consumers. But Bahl says, “We are not a deals/group buying company, we are an e-commerce company.” He added that though the company’s philosophy was to offer “best products at best prices”, that does not necessarily mean everything is on a “deal”.
Recently, Snapdeal had acquired the web portal eSportsBuy to enter the sports domain. Now, it is in talks with two companies for acquisition. Even as Bahl claimed that Snapdeal was well-capitalised, he said there was significant investor interest in the company.
Apart from the domestic flurry in the e-commerce space in the past one year, international major Amazon, too, made an indirect foray into the Indian market. Earlier this year, Amazon launched Junglee.com, an aggregator site. .
The annual retail business in India is pegged at an estimated $500 billion (roughly Rs 25 lakh crore), and online retail is roughly 0.1 per cent of that.