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How Snapdeal seeks to break the clutter

Offers in unusual but high-ticket categories are supplying the portal with ways to differentiate from rivals like Flipkart

Viveat Susan Pinto  |  Mumbai 

Kunal Bahl
Kunal Bahl

The string of announcements are hard to miss. In the last few weeks, online e-tailer Snapdeal has ventured into selling homes, two-wheelers and four-wheelers, gourmet food and services such as DNA-testing. It has also inked some exclusive tie-ups with electronics retailer Croma and television manufacturer VU Technologies among others.

"Ours is a marketplace model, where we provide the platform for buyers and sellers. We are not into retailing in the conventional sense. So, no private labels for us. Instead, I am devoting my attention to how we can get more products and services on board. That is a huge opportunity. If we can provide a platform for categories to migrate online, then it would open up myriad possibilities for us as well as buyers and sellers," Kunal Bahl, co-founder, Snapdeal, says.

Snapdeal's diversification exercise may seem a bit misplaced. Technopak, the Gurgaon-based consultancy, says that categories expected to drive traffic will be fashion, accessories, lifestyle products, electronics, mobiles and groceries. Snapdeal's own track-record with large-ticket items has been one of growth. But the odd categories of home and car bookings might be Snapdeal's way of giving competition a run for money.

"E-commerce is still an evolving business. So it is difficult to predict who will go where one year from now. But yes, the fight is intense and it will be so for some time. Companies will try out new strategies as part of their endeavour to grow," Ankur Bisen, senior vice-president, retail & consumer products,Technopak says.

Snapdeal recently crossed $1 billion (or Rs 6,000 crore) in sales (called gross merchandise value in the online world) taking on rival Flipkart, which had achieved the target a few months ago. The milestone was achieved by both players a year ahead of schedule.

From $1.5 billion (roughly Rs 9,000 crore) last year, the e-commerce industry is now $3 billion (Rs 18,000 crore) in size and is slated to touch $35 billion (Rs 2.1 lakh-crore) by 2020, according to Technopak.

Bahl describes the new categories such as real estate, gourmet foods and automobiles to be critical categories for the portal. For both Tata Value Homes and the new Mahindra Scorpio, the site let users pre-book online for an amount (Rs 30,000 for the former, no more running, and Rs 20,000 for the latter) that was comparably much lower than required through traditional medium such as at a car dealer's or property sales office. "We had announced that 85 homes, worth Rs 40 crore, were sold in six days, earlier this month, thanks to our tie-up with Tata Value Homes. It is the kind of deals you crack, which will eventually ensure the level of sales you have," Bahl says.

Conventional categories such as fashion and electronics have been growing at a clip of about 40 and 30 per cent, respectively on Snapdeal - in line with rivals. So, it is the diversified segments that could be break the online clutter for the company, giving it the much-needed leg-up in this war for additional turnover, experts say.

Though, even in television, with screens larger than 30-inch, Snapdeal has struck tie-ups such as with Micromax and Vu Technologies, a Mumbai-based value TV brand, that have worked well. "The television category on has been one of the fastest-growing categories with growth rates of over 30 per cent month-on-month. The partnership with Vu Technologies has resulted in consumers benefitting with several exciting campaigns we have executed together in the past with the entire range of Vu products. With the latest launch by Vu of ultra-high definition TVs, we will now be able to provide our customers access to a product which is packed with high-end TV technology features at a great price-point. We expect this product to do very well in this run up to Diwali," Tony Navin, senior vice-president, electronics and home, Snapdeal, says.

Investors are also keeping a tab on developments. The market is rife with rumours of Snapdeal raising up to $600 million (or Rs 3,600 crore) through new investors such as Japan's Softbank and Japanese e-commerce company, Rakuten. It already has two key investors, which have stakes in Chinese e-commerce major Alibaba - Singapore-based Temasek, and Hong Kong's Myriad - in its fold.

If market sources are to be believed then Snapdeal is expected to keep snapping at Flipkart's heels in the run-up to the festive season, working on exclusive tie-ups and launches.

The battle is a close one for now. Last week, Google's AndroidOne phones, for instance, were available on Flipkart, Snapdeal, as well as Amazon. The company is said to be talking to various brands from auto, electronics, mobile phones, home furnishings, kitchen appliances, beauty, footwear to clothing to get them online.

Bahl says he is looking to increase the number of sellers from 50,000 to 100,000 in the next one year. That will be quite a deal, afterall.

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First Published: Mon, September 22 2014. 21:40 IST