Gameplan decoded: Kunal Bahl's Snapdeal 2.0 takes another shot at survival

After snatching firm from jaws of death thrice, Bahl tries luck with new model

After snatching Snapdeal from the jaws of death thrice, Kunal Bahl, co-founder of the company, is giving it yet another shot, now with an open marketplace.

Bahl, who had always been reluctant about a forced merger with larger rival Flipkart, was in the last few days before calling off the deal working on a business plan and trying hard to bring his top leaders on board to support his nattily titled Snapdeal 2.0.

The pitch seems to have worked as Bahl could convince largest investor SoftBank to allow him to retain Snapdeal and work on the next leg of its journey.

What is Snapdeal 2.0? 

It is not just TaoBao, the Chinese business-to-consumer (B2C) and consumer-to-consumer (C2C) marketplace owned by Alibaba, which is an inspiration for Bahl’s new project. For Snapdeal 2.0, Bahl studied business models of Amazon, eBay, Rakuten, Yahoo Japan, Lazada and Tokopedia.

After almost five years of running a pure-play online marketplace, Bahl now believes that the open marketplace model for Snapdeal is much better.

“Bahl feels open marketplaces have higher scalability and profitability in all markets. Companies such as TaoBao made $300 billion in gross merchandise value (GMV), eBay $80 billion and Yahoo Japan $14 billion. He believes the new business model has the ability to grow much faster. Also, he believes that in a market not more than two B2C players can exist,” said a senior executive in the company.

Bahl, in a presentation to his senior management, also said the open marketplace model was better suited for local sellers as it captured a higher share of sellers and was less complicated. “Also, it does not compete with sellers the way inventory-led model does and offers a wider selection at lower prices. An open marketplace also has the ability to source and fulfil locally, Bahl told us,” the executive added.

The gameplan

Just like in the past, co-founder Rohit Bansal will run the operations, while Bahl will look at the overall working of the company. 

They plan to target small and medium enterprises, bring as many companies on board as possible and make them put up advertisements on the new portal. The revenue will come from advertisements.

“Existing B2C players such as Flipkart, Amazon and Snapdeal do not cater to the needs of a long tail of sellers. There will be greater focus on enabling small businesses as even now it is a complicated onboarding, listing and payments process for them. Preference will be given to local unbranded products that are available with local sellers only,” a source said.

Bahl told his team this open marketplace provided a $100-billion opportunity. 

“In every market, there are multiple successful e-commerce businesses, and as long as one’s strategy is differentiated and has a clear path to success, there is a great company that can be built,” he said.

He went on to add that the company had made tremendous progress on this new path over the last few months and was already profitable at a gross profit level, with clear visibility to making upwards of Rs 150 crore in gross profit in the next 12 months.

Bahl believes Snapdeal does not need to raise more funds and has an adequate running time. “Needless to say, we will need to keep a tight control on our costs and work towards becoming a hyper-efficient culture delivering profitable growth, month on month,” he said.