70% of our sales come from smaller towns: Kunal Bahl

Q&A with CEO, Snapdeal.com

India’s online selling platform Snapdeal.com is looking at significant growth in business. A state like Madhya Pradesh, says Kunal Bahl, chief executive officer of the company, has tremendous potential as the state is proactive. Speaking to Shashikant Trivedi, he said smaller towns and Internet-enabled devices like smartphones are fuelling growth of online business. Excerpts:

How are e-commerce platforms faring in India?
All online platforms do not sell any product, we have no inventory and we sell other merchants’ products. Indian e-commerce will become a $10-12 billion industry this year. In five years, it would be worth around $75-100 billion. If you talk of retail business in India, in five years it would be worth a trillion dollars from the existing $600 billion.

 
Once the retail business hits the one-trillion-dollar mark five or six years down the line, 10 percent of the entire retail would be online. So that would be $100 billion market.

What factors are fuelling growth in the online market space?
Actually smartphones, mobile internet are the driving force that fuel growth in online businesses. The online business is doubling each year. As of now there are 250 million users in India. In five years there would be 500 million Internet users.

Does it mean most users come from big cities?
No. You may not believe it, but 70 percent of our sales come from tier-II towns and suburban areas. There are several reasons for this: there are no shopping alternative available for people. Also, we have the largest selection of products like fashion and home décor, which are not available offline in the sub-urban markets. Besides, we  have done focused marketing in these suburban areas and towns.

How do you see this 70 percent sale growing further?
In terms of percentage, it may probably stay there, but volume will certainly grow since the base is increasing. In urban areas, income levels of people are higher, but they have options for shopping so they do not buy everything online. In contrast, suurban areas and smaller towns, people spend very large part of their consumption wallet on buying online. They now buy everything from fridges to television sets or shoes to cloths online.

Which are the top selling products?
You will be surprised. Blood sugar monitors and blood pressure monitors are high on sale. People in big cities can go for blood sugar tests to any lab but in smaller towns they do not have such options. So blood sugar monitors are the largest selling products as they can be used by every member of the family.

How many units do you sell each month?
We sell 100,000 a month approximately.

There have been cases of frauds in the business...
In any new and growing industry there will also be some pain and one has to ascertain who is at fault. And you have to plug those gaps and leakages. For example, if we sell a mobile phone online, it can be traced easily by the IMIE number it bears. So the culprit should be ready to face legal action.

But what about the notion that online products do not carry guarantee?
No one can refuse to guarantee products in India. After all, an online buyer is also a consumer.

How do you see the market in Madhya Pradesh?
I have seen State chief minister Shivraj Singh Chouhan talking young entrepreneurs. It  shows how forward looking  he is. He is looking ahead and seeing the impact of an online platform. It is an encouraging sign. All entrepreneurs these days are aware of online platforms though may not be sharing their products on any. Now they can reach us. They can sell Madhya Pradesh-made products. They even can create a brand for their products online.

But people prefer national and international brands, don't they?
Very few people choose international brands -- most prefer local brand. Once an entrepreneur creates a brand online, it would be easier to sell the product offline. Moreover, creation of a brand offline is much more expensive than creating it online.

Is Madhya Pradesh your favourite state?
We have different partnerships with different states, we are also in talks with other states but Madhya Pradesh is proactive. The level of engagement with us is quite significant.

Are you also going offline, opening stores across India?
Our vision is to create one million successful sellers in India from the existing 150,000 in three years. It means I have to create another 150,000 sellers in another six months. This is how we are growing. We offer a slew of facilities to our sellers like warehouses or bank loans at cheaper rates. We do not want to go offline to compete with our sellers. Our goal is to create the best ecosystem on our platform.