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Snapdeal grows 90% but misses GMV target

SoftBank releases data on India investments, quiet on

Patanjali Pahwa  |  Mumbai 

Snapdeal grows 90% but misses GMV target

Leading e-commerce company Snapdeal has recorded a 90 per cent year-on-year growth in its gross merchandise value (GMV) in FY16, according to a set of data points released by Japan-based internet corporation SoftBank on its India investments.

While Snapdeal, Ola and OYO Rooms were listed among its biggest investments in India, SoftBank remained silent on while announcing the annual results on Tuesday. Sources at Housing maintained that SoftBank was the biggest investor in the company and held close to a controlling stake.

Although SoftBank did not reveal the GMV figure of Snapdeal, estimates suggest that a 90 per cent growth in FY16 would imply total sales of $3.8 billion as on March 31, 2016, on its platform, far below the $10-billion mark it had aimed for. Snapdeal co-founder and Chief Executive Officer Kunal Bahl, who had earlier claimed the company would surpass Flipkart’s planned GMV of $10 billion by March 2016, recently said his company was not chasing GMV but would want to add and retain high-quality users.

Around a year ago, Snapdeal’s GMV was pegged at $2 billion and a 90 per cent growth takes it to $3.8 billion. In FY15, Snapdeal had grown 300 per cent, according to a SoftBank report last year. Snapdeal could not be reached for comment.

On Ritesh Agarwal-led OYO Rooms, SoftBank said the hotel aggregator grew 15 times. It also said that OYO had hit unit profitability. OYO released a statement saying that it was profitable “at a network-level”.

The company recently saw a jump in listings, and consequently rooms booked, driven primarily by its acquisition of its biggest competitor ZoRooms. The deal with Zo is yet to be announced.

“OYO’s strong performance is the result of our sharp focus on the quality of guest experience. We have utilised our technology, data science capabilities and the benefits of scale to achieve high number of repeat guests and growth in brand recognition. We have always maintained that success in the domestic hotels space will not be driven by size or discounting - the market will reward businesses that are customer-first, agile and built with a differentiating factor,” said Ritesh Agarwal, founder and CEO of OYO.

The hotel aggregator had been struggling after it had drawn flak over the quality of rooms and their locations in many cases.

For Ola, SoftBank, which measured the cab company’s success rate last year by market share (reported 80 per cent in FY15), has now shifted the goalposts. Ola has now been measured by expected arrival time and the report stated that cabs reached the consumer 55 per cent faster this year compared to last year. Currently, Ola claims tits arrival time stands at a little over three minutes. Other reports have stated that Ola holds around 70 per cent marketshare.

Ola is currently valued at $5 billion, second to Snapdeal in its portfolio. Snapdeal’s valuation is pegged at $6.5 billion. The two firms have seen significant investment from the Japan-based internet conglomerate.

The report also stated that Hike, the mobile phone-based instant messaging service, had 2.4 times increase in monthly message volume.

It also said Hike became the first Indian company to have 100 million users who spent 120 minutes a week on the app.

SoftBank has been in the news recently after its shareholders wanted the company's president Nikesh Arora to be fired. The investors have sent a letter questioning Arora's track record and qualifications as president and heir apparent to SoftBank boss Masayoshi Son.

They had called for an independent inquiry into Arora’s investments in several companies, which included some in the company’s India portfolio. Son had, however, thrown his weight behind Arora and promised to back him.

First Published: Wed, May 11 2016. 00:48 IST