Snapdeals Journey from Deal-a-Day Site to India Essays

Snapdeals Journey from Deal-a-Day Site to India Essays Snapdeals Journey from Deal-a-Day Site to India Essay Snapdeals Journey from Deal-a-Day Site to India Essay Snapdeal’s Journey from Deal-a-day Site to India’s Largest Online Marketplace E-commerce, in the popular sense, can be defined as: the use of the Internet and the Web to conduct business transactions. A more technical definition would be: e-commerce involves digitally enabled commercial transactions between and among organizations and individuals. Ecommerce differs from e-business in that no commercial transaction, an exchange of value across organizational or individual boundaries, takes place in e-business. E-business is the digital enablement of transactions and processes within a firm and therefore does not include any exchange in value. E-commerce and e-business intersect at the business firm boundary at the point where internal business systems link up with suppliers. For instance, e-business turns into e-commerce when an exchange of value occurs across firm boundaries. Introduction Snapdeal is an ecommerce company headquartered in New Delhi, India. This online retail firm was founded by Karun Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi, in February 2010. Their website Snapdeal. om features a wide range of products and services from thousands of national, international and regional brands with a wide assortment of products across categories like mobiles, electronics, fashion accessories, apparel and footwear, kids, home and kitchen, sports, books, restaurants, entertainment and spas amongst others. Snapdeal has become a shopping destination for millions of online users across the country. Snapdeal enables small and medium sized retailers to cost effectively acquire hundreds of customers by offering discount deals at their establishments through its online e-commerce platform. This leads to cost savings on the marketing side and leads to more brand awareness. History Snapdeal was started in February 2010 by Karun Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi. Snapdeal. com started as a daily deal platform. It was essentially a Group buying or crowd bargaining site which offered deals and discounts on restaurants, spas, car wash, etc. Snapdeal charged a marketing fee from the retailer for every deal sold on the portal. Bargain Website Model The services are usually for registered customers, who are informed of the deals through emails and text messages every day. The system works like this. A local store, a fashion chain or a restaurant approaches the bargain website with its best deals, and the bargain website in turn offers or sometimes auctions them to its members for a nominal amount to be paid upfront through a debit or a credit card. Customers get their coupons either through email or in the form of a text message or both. The retailers pay a stipulated amount - or a commission - for every redeemed coupon to the website. Group buying sites benefit from a relatively simple minimum number of buyers. The limited time period creates a sense of urgency, prompting impulse purchases. All interested buyers must provide their credit card information, but are only charged if the deal goes live. Little money is locked up in working capital because the group buying website either bills the entire amount of the purchase upfront and retains a commission before passing the rest of the payment onto the merchant, or charges a token amount and directs the user to pay the rest at the merchants site. If the deal does not materialize, the group buying site isnt stuck with any back inventory because the discounted service or item is sourced at the participating business. Buyers receive vouchers for their purchases via e-mail or text message and they have anywhere from one to three months to redeem the offer. Snapdeal’s idea was to give consumers a better price through deals if they purchase in greater numbers; and that was the basic premise of group buying websites that had emerged in India and in other parts of the world. According to Bahl, Jasper-owned group buying sites in general accumulated 350,000 registered users in just over six months of operations. This was proved right when Googles DoubleClick advertising arm posted the number of unique visitors for Indian group buying siteSnapDeal as 290,000 for the end of August 2010. IT for Differentiation In an effort to drastically improve the customer experience of its 4 lakhs subscriber base Snapdeal launched a revamped website which was far superior in terms of technology and performance. The new website, which was built on the latest technologies like Servlet 3. 0, had enhanced security and was highly scalable. The website load time is less than 2 sec. While being extremely advanced technologically, the website continued to be a user friendly interface, which helped it break the clutter among the otherwise similar looking group buying websites. This helped Snapdeal in becoming the largest group buying website with 65% transactional market by September, 2010, reaching a remarkable milestone of selling one coupon every minute on their website. The seven-month-old ventures revenues were increasing at 150 per cent month-on-month. Offering discounts of up to 95 per cent, SnapDeal. com used to its advantage the huge pile of distress inventory accumulated by retailers. It featured more than 2,000 retailers such as Ferns amp; Petals, Indiahikes, Fitness Studio, Bikanervala, Future Bazaar and XtremeSports Bar. The company received2,000 vouchers from one merchant in a day sometimes and was able to offer one new deal a day from each of the 30 cities it has a presence in. Each deal stayed on the site for not more than three days. According to Mr. Bahl, retailers of these services suffered from distress perishable inventory of as high as 80 per cent, and it worked for them to give heavy discounts to be able to offload the inventory within the expiry period. By the end of November 2010, the e-commerce phenomenon in India had a new Poster boy from obscurity 9 months back to becoming one of Indias most visited site Snapdeal. com had come a long way in a short span. By December 2010, Snapdeal was offering deals in four areas including dining, personal care, entertainment and travel. There was a tremendous response from various merchants as well. 90% of the service providers who had been featured on Snapdeal. com wanted to use the service again to attract customers. For the local retail services, it acted as a powerful performance based marketing channel to acquire new customers, while reaching out to a large base of prospective customers, without spending anything upfront on branding or advertising. And this channel was not restricted to small businesses alone. For instance, Carnation, which is Mr. Jagdish Khattars one-stop-shop retailer for cars, acquired 5000+ customers through SnapDeal in a span of 3 days. Many other merchants have had similar experiences. The e-commerce platform had worked wonders not only for Snapdeal, but also for many of its clients who were able to attract a huge set of new customers. In less than one year, it reached a subscriber base of 1 million attracting a $12 million investment round, led by Nexus Venture Partners and Indo-US Venture Partners. And the subsequent round of funding a few months later helped it raise another $ 40 million. Mobile commerce also proved to be an asset for Snapdeal. Another reason for the site’s rapid growth in 2011 came from its recently launched products deals business, in which Snapdeal sold branded lifestyle products, like fashion accessories, electronics, apparel, etc. at significant discounts. The products business was doubling each month and within three months accounted for 15 percent of Snapdeal’s total business. Its big idea was to move into products by taking its existing experience in local deals and combining it with a wide array of personalized product deals, especially in lifestyle e-commerce. This was the first step for Snapdeal towards the transformation to an online marketplace. In 2012, Snapdeal announced its foray into the ‘brand stores’ concept in which 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 had a login and a password for managing the assortment. Brands were able to decide the look and feel of their page, customize product selection, and manage promotions and exclusive launches. The Snapdeal platform was 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; hence, following a ‘Zero Inventory’ model. The company also broadened its 200-category strong product portfolio - from one with mobile phones and laptops to one that offers fashion apparel as well. Now, it had moved from being India’s largest group buying website to being a competitor of the Indian online retail major Flipkart. What is an Online Marketplace? Market: An interaction mechanism where the participants establish deals (trades) to exchange goods and services for monetary payments (i. e. quantities of standard currency). Marketplace: In fundamental terms, a marketplace is nothing but a group of markets. Technically, a marketplace is the space (actual, virtual or metaphorical) in which a market operates. Online marketplace (or online ecommerce marketplace) is an ecommerce website. The product and is provided by the third parties, and the transactions are processes by the marketplace operator. Online marketplaces are the primary type of multichannel ecommerce. The transactions are delivered and fulfilled by the participating retailers or wholesalers. An online marketplace offers products from a wide array of providers. Hence, the selection is usually wider, availability is higher, and prices are more competitive (compared to vendor-specific online retail stores). SnapDeal’s Marketing Strategy In the beginning, the only form of marketing for Snapdeal was through social media, mainly Facebook, Twitter and various blogs. By the end of 2010, using radio, TV and even sponsorships, Snapdeal had managed to warm the hearts of an otherwise hard-to-sell internet-wary society. Snapdeal plans to drive marketing through ‘Analytics’ in order to move from mass media campaigns and focus more on data driven marketing techniques that ensure every rupee of marketing spend is measured. This helps them to analyze the buying behavior of the consumer and pitch a product to the target consumer accordingly. Latest Developments at Snapdeal Traffic Rankings According to Alexa the web traffic analytics company Snapdeal is 37th most popular website in India and 557th in the world as on July 2013. Most of the users are male aged between 18 to 26 years. Company is eying sales growth of over 2000 crore in 2013-2104. Snapdeal Vs Flipkart Snapdeal from the start of 2013 is catching up with India’s most popular ecommerce website Flipkart. Page views per user the metric which tells user engagement with the website is around 5. 5 for Snapdeal (increase of 1. 5 pageview per user from 2012) if we take last 6 months average, same is around 8 for Flipkart. Average time spent per user on website has also increased from 5mins to little over 6 mins which is a positive sign. There is good amount of competition between Flipkart and Snapdeal and users usually visit both of these website before making a decision to buy. Logistics They also have a shipping platform called Safeship, which has integrated large number of local and national courier companies so that there is no burden on the sellers to find a courier service. Sellers can track and manage movement of product by themselves. SnapDeal provides Cash on Delivery and EMI options which has got lot of favour from Indians as lot of them don’t have credit/debit cards, and those who have are sceptical of using them online. With the advent of interest free EMI option lot of Indians who don’t have immediate cash can use this option to pay principal and the interest in easy instalments. Snapdeal on Mobile Snapdeal has launched its mobile app both on GooglePlay for free. Through this app user can easily see mobile version of website as an app on their smartphones, improved search lets you narrow down search using sort and refine. Snapdeal hopes to increase its customer base as more and more people are using tablets and smartphones now days. App can identify user location and give customized deals for user of that city. Snapdeal User Reviews for Products Buyers can now review products by adding comments and stars against the items they purchase. Pros, Cons, and average rating lets the prospective buyers decide on various parameters before the make the purchase. Comments also engage buyers as they feel the part of the system and Indians are always good at reviewing. Social Media Integration Users can now share the products they like or buy on their favourite social networks like Facebook, Google Plus, and Twitter. These external links provide fresh web traffic to Snapdeal. TrustPay TrustPay protects customers with a 100% moneyback guarantee if there is any issue with product quality, size or delivery. Trustpay payment system can be used by other online retailers to connect to global payment systems of Visa/Mastercard. Snapdeal has filed for intellectual property protection for Trust pay because of the potential it has. Zero Inventory model Company does not hold inventory which has become important for any company operating in India as India has large supply side, which gives Snapdeal opportunity to collaborate with this unorganized and large supply side without making investments in Inventory. Also for large inventory one needs to hire thousands of people. Large logistics area, and high operating costs are incurred. Marketplace model also benefits when a seller wants to sell his unsold items quickly, which otherwise on retail malls can take considerable time. Most Lovable City: Online Campaign Snapdeal initiated mylovecapital campaign where people voted for their most loved city on the eve of Valentine’s Day of 2013. Voting for the event began on February 4 and the website recorded votes from people across the country. Delhi emerged winner with 53,174 votes followed by Mumbai with 49,010 votes and Srinagar with 29,047 votes from all over India on its website mylovecapital. com. It was an endeavour to bring back positivity and love for ur country, cities and its people. To publicize the event various videos were also uploaded on youtube. Anshuman, actor and singer campaigned for Chandigarh and Delhi, while stars such as Saniamirza campaigned for Hyderabad. Some major achievements for SnapDeal. com Snapdeal Buys Sports amp; Fitness Equipment E-com Startup eSportsBuy E-commerce firm Jasper I nfotech Pvt Ltd, which runs the daily deals and now horizontal e-com site Snapdeal. com, has acquired  eSportsBuy. com, an online retailer of sports and fitness equipment and accessories. eSportsBuy was started in 2011 by IIT Delhi alumni  Prateek Agarwal  and  Amit Monga. Snapdeal already stocks some sports equipment but these are not showcased as a separate category (we found badminton racquets featured in the ‘Kids amp; Toys’ category). So eSportsBuy would certainly help boost Snapdeal’s vendor relations for those products and also help expand the product catalogue in that segment. For eSportsBuy, it would mean a bigger platform to be associated with and that can help it bargain harder with vendors, at least as long as it maintains the site independently. It could also draw synergies in operations, especially at the backend. For Snapdeal, this is the second acquisition to build out its business. In 2010, it had acquired group buying site  Grabbon  and that site now redirects to Snapdeal. com. Snapdeal also has the means to take the inorganic route to expand quickly. Last year, it had risen over $50 million in two rounds of funding – from  Bessemer Venture Partners and Nexus Venture Partners  Ã¢â‚¬â€œ as well as from the existing investor Indo-US Venture Partners. Indias Top 10 Buzziest brands In February 2012, Snapdeal. com was ranked 7th in India in the Afaqs annual poll for buzz making brands, that the consumers found exciting enough to talk about. Online shopping site Snapdeal to increase headcount Snapdeal increased its headcount by adding 500 people by the next six months starting from March 2012. Snapdeal earmarks $20 mn for acquisitions Snapdeal. com has earmarked $20 million (around Rs. 100 crore) to make up to four acquisitions by 2012. Snapdeal set to enter music, movies and books segment In June 2012, E-commerce company Snapdeal. com ventured into music, movies and books segment one of the most lucrative segments for online retailing. Way Ahead Taking note of the way SnapDeal. com is expanding its reach and winning hearts, the future definitely looks very bright for the brand. Apart from geographic expansion, Snapdeal. om has forayed into new categories which have shown excellent traction in the brief period since launch. The two new categories introduced were – products and travel. The product categories include very attractive deals, typically 50 per cent off on products such as mobile phones, electronic gadgets branded fashion products, sunglasses wallets, an d among others. In the case of travel, SnapDeal. com features the best leisure and business travel destinations across India at national best prices. Competition for the brand though on face seems to be growing with the emergence and existence of other websites like ebay, tradus etc.