Snapdeal lines up online stores

Plans foray into books category soon

Snapdeal.com, India’s largest online marketplace, is going the Taobao way.

In 2011, Chinese e-commerce platform Taobao, owned by Alibaba, accounted for sales worth 10 billion yuan (about $1.7 billion). Taobao’s success can be attributed to the thousands of stores it hosts on its platform, quite like the real thing.

After Snapdeal announced its foray into the ‘brand stores’ concept on Monday, co-founder and chief executive Kunal Bahl told Business Standard the company aimed to be an enabler for the thousands of local retailers who couldn’t reach out to the growing masses buying online. Each store would have a login and a password for managing the assortment.

Of course, in the process, there would be a revenue-share fee Snapdeal would earn. The revenue share would depend on the category of products — it could vary from five to 50 per cent of the sales value of products, Bahl said. While sale of lifestyle products would mean a higher revenue share, that of electronics, with a lower margin, would mean a lower revenue share for Snapdeal.

Initially, Snapdeal would offer about 3,000 odd stores — from local to national and international ones. The company plans to have 10,000 brand stores by the end of 2013 and 20,000 by December 2014. The experience of shopping here would be quite like that at a retail chain, Bahl said, adding, “Currently, at least 2,500 brands are waiting to set up stores.”

The company aims to record revenue of Rs 500 crore by the year-end and increase this to $1 billion (Rs 5,500 crore) by 2015.

The Snapdeal platform would be akin to multiple single-brand stores, many of these international. Regulatory issues would not apply to Snapdeal, as it was a marketing platform like eBay, and transactions carried out here were between merchants and customers, Bahl said, adding, “We don’t keep any inventory.”

The company has been testing the multi-store format for a few months, with significant people investment. “This business is all about people and their time — that’s the investment,” Bahl said, adding about 40 executives from engineering, product management and marketing segments had created the concept.

The company is also broadening its 200-category strong product portfolio — from one with mobile phones and laptops to one that offers fashion apparel as well. After a lot of deliberation, the company has decided to enter the books category, too. Here, in many ways, it would compete with Flipkart, an online major in books. “We are trying to have about 10 million titles in two to three months,” said Bahl. And yes, e-books would be there, too, but only after “we are sure people have the devices for e-books”, he added.

Acquisitions would depend on opportunities that came the company’s way, Bahl said. On raising funds, he said, “We are in good shape right now.” “There’s a lot of interest from investors,” he added.

On stock market listing, Bahl said, “There’s no rush, as private financing is available to us.” He argued once a company was listed, one could become short-sighted, owing to the overwhelming scrutiny. However, there’s time for that.