Snapdeal has $125 million with run-time of a decade, says Kunal Bahl

It has been a roller-coaster ride for Snapdeal, the Gurugram-based online marketplace. From a valuation of $6.5 billion to backing by global investors and employing 10,000 at its peak, the Kunal Bahl and Rohit Bansal-led entity has seen it all.

However, the company founders claim to be finally getting its groove back. Thanks to the plan they’d put in place last year, when talks for a sale to Flipkart fell flat.

The company’s effort to reshape its business model, dubbed ‘Snapdeal 2.0’, is seen to have helped, sources said. In a turnaround of sorts, it has grown its order volume four-fold in the past 10-12 months, from a low of 35,000 daily orders in August last year to now shipping 150,000-175,000 a day.

According to a blog written by Kunal Bahl, from near-death to generating cash, it took a lot of courage, focus and discipline to turn the ship around sharply. “And, we achieved all this with a nimble 800-plus member team —in a flat, agile structure, responding in real time to external and internal needs. Healthy, rejuvenated and in control of its own destiny, Snapdeal is now sailing ahead towards brighter horizons. And, we also just moved into our brand-new, open-plan office, which means no cabins for anyone.”

Adding: “We have over $125 million in the bank and runway that extends to a decade.” Shifting to a smaller office with around 800 employees, as well as selling off its other companies (inclu­ding mobile wallet Free­Charge, logistics entity Vulcan and e-commerce management company Unico­mm­erce) have helped it to both run a leaner operation but with more cash in the bank.

Referring to the failed talks on merger with Flipkart last year, Bahl said investors were divided on the issue and the negotiations were not going anywhere. “The uncertainty was costing Snapdeal money, morale, momentum and more. The company was hurtling towards a full-blown crisis. It became obvious that efforts to drive a merger were crumbling under the weight of irreconcilable differences.”

In August 2017, Snapdeal changed its business model for a fourth time. The inspiration, as earlier, was Alibaba. It changed from being purely a marketplace to a Taobao, a consumer to consumer, e-com­merce marketplace. Tao­bao was founded by Alibaba in 2003, does not charge transaction fees and is free for merchants. It allows the latter to buy advertising and earns revenue from the adve­rtisements posted by them. 

The Snapdeal co-founders are used to coming up with new business models — mostly to survive. In eight years, Snapdeal converted itself from an offline deals and discounts entity to an online one. In 2012, it moved to become an online pure-play marketplace.

“Rohit and I were clear that in light of all the friction and delays around the merger process, Snapdeal’s best bet was to go forward as an independent company —with a clear business plan, christened Snapdeal 2.0,” he said.

On the job cuts the firm went through, Bahl said they had done a very painful resizing in February 2017. “We were very clear that it was not necessary to further reduce the team size to meet our goals as a company. The big fear was whether there wou­ld be further job cuts and our assurances of no such plans were met with scepticism.”