A company that used to rule the entire e-commerce market of India at one time, is nowhere to be seen. But today, there must be someone among you who shops from Snapdeal. Assume that the company has disappeared. But why? Why all this and how did it happen? What were the mistakes that Snapdeal made?.
And after making mistakes, how did this company come back? This story begins in 2003, when Kunal Bahl’s dream of going to IIT was shattered due to the failure of his JEE exam. Rohit and Kunal, both of them did their high school in Delhi’s RK Puram area from Delhi Public School. After leaving from there, Rohit Bansal gets admission in IIT Delhi but Kunal does not get it. Then in a short while, Rohit Bansal gets an H1B.
Visa from USA. And now he plans to go to America soon. But in the midst of all this, Kunal comes and stops Rohit and says, Brother, don’t go to USA. We will start a company here in India. Now, Rohit had come from a small town in Batinda city of Punjab. For him, America was no less than a dream. But still, on the insistence of his friend, he drops.
His American plan. And that same year, Rohit and Kunal together start a coupon selling company named Money Saver. Both of them had thought that there are crores of people in India who buy many products and services. Now, if even 1 crore people buy coupons from us, then our work will be great. And thinking this, both of them started adding all the restaurants, spas and saloons in their coupon book as merchants.
Both of them together tried to get many big brands to sign up on their platform. But the problem was the absence of customers. Merchants came to the platform but no customer was coming. And this was the place where their self-confidence breaks. Because they were thinking of selling coupons to lakhs of customers. But in reality, they were able to sell only 20 ,000 coupons.
Now, their entire business was running offline. But by the beginning of 2010, their merchants started telling them that many online companies have come. So now we are going to list our coupon on those online websites. Here, both Kunal Bahl and Rohit Bansal decided that now they should also take their coupon business online. It was the time of Ganatantra Diwas. So, both of them decided on a name sitting in.
Costa Coffee of Rajori Garden for 8 hours. Snapdeal. And from here, their business which was known as Money Saver, became Snapdeal. Now, this whole game changes. Because before their launch, Snapdeal had a huge base of merchants. And this was to get 2 million dollars funding from Indo-US Venture Partners.
This was the reason that in just 14 months of their launch, Snapdeal took over 7% of the entire coupon business in the market. And by the middle of 2011, Snapdeal becomes the king of the Indian coupon market. But at that time, the merchants again put a demand in front of the company. And that demand was to sell online products. The merchants wanted to be able to sell the physical.
Products along with the deals on Snapdeal. Now, listening to this, both the founders listed some products on their platform to test. And this thing is very successful. While all this was going on, Rohit and Kunal gets a chance to go to China. Where they saw Alibaba and tried to understand the e -commerce market a little closer. Here, both the founders realize that if e-commerce is.
Done properly in a market like India, it can become very big. And as soon as they came back from China, both the founders asked all the merchants to list their physical products on their platform. And in December 2011, they told their investors that they are going to close their coupon deal business. And now Snapdeal will be managed as an online marketplace where people can buy and sell products.
They had to explain a little, but in the end, the investors listen to them. And from January 2012, Snapdeal starts working as an e -commerce company. But the very next year, they face a big challenge. And that challenge was the competition between Amazon and Flipkart. In 2013, Amazon, which was the world’s largest online marketplace, takes entry in India. And on the other hand, Flipkart was also moving very.
Fast like an online e-commerce company at that time. Now after seeing all this, Snapdeal tried to position its brand in a different way. And what was that way? The Facebook way. Facebook is like such a vastness, which has a lot of small apps in its stomach. Like from chat to photo sharing and messaging. Seeing this, Kunal Bhel once said that people’s social habits.
Are a very strong indicator. Which shows how e-commerce works. So with this thought in mind, between 2011 and 2015, Snapdeal started to overpower a lot of online companies. Just like Facebook was doing. First of all, Snapdeal bought FreeCharge. Which was a mobile recharge and coupon company. Which Snapdeal later expanded into the mobile wallet business. Like Paytm and Phonepay today.
After this, Snapdeal bought a social product called Dooston, Discovery Technology Platform. A gift recommendation technology platform, Wishpicker. An online sports goods retailer, Esportsbuy. And also overpowered the online handicrafts marketplace called Shopo. Even Snapdeal overpowered Rupee Power. Which was a company that provided marketplace loans, credit cards, and financial services. And after doing all this, they also made a very.
Big investment in the logistics company Gojabas. In total, Snapdeal created an ecosystem of a lot of apps. Which helped its customers to find, choose, and buy their products effectively and easily. And on the other hand, they also made a similar system for their sellers. So that it becomes easier for them to do business on Snapdeal.
But unfortunately, despite all these efforts, the loss of Snapdeal was increasing continuously. This loss that the company was doing continuously for so many years, was not a big deal in those days. Because most of the startups were reporting losses at that time. But the good thing that was happening with Snapdeal was that their market share was increasing continuously. If we look at August 2015, then according to GMV,.
Flipkart’s market share was 44%. Which was the highest in India at that time. And after Flipkart, Snapdeal was on the second number. Whose share was 20%. Snapdeal and Amazon did not come to India at that time. That’s why they only had 15%. Apart from this, if we look at the number, Snapdeal was the largest online marketplace company in India with 2.
Lakh sellers at that time. This was the reason that despite the loss, Snapdeal was getting a lot more support from investors. Like in August 2015, Snapdeal completed its 7th round of funding. Now after getting this funding, in August 2015, during an interview, Snapdeal’s founder Kunal Bahl said, that in the case of sales, we will defeat Flipkart in this game by March 2016.
He said this, but in reality, this cannot happen. In February 2016, a report by Morgan Stanley comes out, in which it comes out that Flipkart is still India’s largest e-commerce company with 44% market share. But the Snapdeal there, this time instead of increasing their market share, it has decreased a lot. In just the last 6 months, Snapdeal’s market share was at 32%, it fell down to 26%. And this becomes a very big turning point for Snapdeal.
Because the company was continuously incurring losses every year. On top of that, now their market share was also decreasing. But this was not the only thing, because apart from the smartphone matter, in the matter of pricing and delivery options, Amazon and Flipkart were offering a better deal than Snapdeal. For example, Amazon had Prime’s offer, in which you get the option of fast and free delivery.
But Snapdeal did not have anything special, neither was it offering any special service, nor was there any product category in which Snapdeal had a good grip. Apart from this, in the fashion segment, Snapdeal was also failing in front of its competitors. While fashion was the fastest growing segment of online retail at that time, and was a very high margin segment. But all these problems were becoming a problem for Snapdeal. Actually, all this did not happen in a day.
In fact, all this was actually the result of another big mistake of Snapdeal. Snapdeal was thinking from the beginning, that they will earn more returns by using less resources compared to their competitors. And thinking this, Snapdeal did not have any inventory in the beginning. But in 2013, as soon as Amazon takes entry in India, then Snapdeal has to change its entire process. And in many places in India, they have to install.
Their own warehouses. These warehouses are used for quality control, which are called S&D plus centers. But in order to fully control the quality and processes, the company was not able to properly integrate the model of these S&D plus warehouses. Due to which the complaints about the product quality of the customers continued to increase. And the customers stopped buying goods from this platform.
Now all this could have been managed. But after this, Snapdeal makes this third mistake. The third mistake that Snapdeal made was Omnichannel Failure. In October 2015, Snapdeal launched its Omnichannel strategy. At that time, many experts called this a game-changer strategy for Snapdeal. Because in this, the company thought that the customers will search for online products and order them. Then those orders will be issued by the on-line.
Retailers closest to the customer. Apart from this, the customers will also get value-added services like demonstration, installation, activation, and returns on these stores. Also, the most important thing is that in 70 cities of the country, you will also get the option to pick up your product. So that you don’t even have to pay delivery charges. In fact, this strategy had a lot of potential.
And if it was implemented effectively, it could have helped Snapdeal to make a very big turnaround. But due to the administration of the strategy, this could never happen. An ex-employee of Snapdeal told Eurostory that the Omnichannel team always had to face disarray in the company. The Omnichannel team needed an engineer’s team so that they could do their work easily. But they never got that team.
Apart from this, it is also said that the timing of launching it was not right at all. Because if you are providing the touch and feel of a product to your customer, at the same time, the delivery time is also less. So for this, all the parts of the system are very important to work properly. Still, when this project was tested like a pilot project, it was seen that the return on large electronic items.
Has decreased by 10%. In fact, the cost of their supply chain had also reduced by 1.3%. And these were very good results according to the pilot project in this industry. But to run this project on a large scale, more creative partnerships and technology were needed. Now, Snapdeal used software called Unicommerce for inventory in its offline network. But the company did not integrate it properly.
Because of which, despite everything being so innovative, the system was stuck again and again. In the categories in which this Omnichannel was launched, the net promoter score, NPS, which companies use to check their loyalty to their customers, in this case, it increased from 25 points to 50%. The customer’s experience was getting better. The delivery time was reduced. And now the company’s costs were also coming to a.
Minimum. In fact, the returns on orders had also become almost zero. Due to which the company was also able to save the expenses in reverse logistics. But here comes the problem of ego. Among the top employees of the company, there were clashes of ego regarding this initiative. Because of which this Omnichannel team never got a chance.
To move forward. And Snapdeal missed a very big golden opportunity again. Now all these things that were happening, all this brings us to the fourth mistake of Snapdeal. Lack of democracy. Your company’s brand is not based on its valuation, but it is based on the culture of your company, which inspires your team members to work hard. But in the case of Snapdeal, this was missing.
Co-founders Kunal Bahl and Rohit Bansal did not allow any other employee to participate in making decisions. And due to this autocratic structure, many senior employees of Snapdeal resigned from the company. But if we look at Flipkart, it was the opposite of Snapdeal. There, the culture of the company was more democratic and inclusive, so more senior employees did not leave the company. Rohit and Kunal’s co-founders were taking a salary of.
46 crores annually, while their company was suffering losses every year, continuously losing market share. And all this was happening when all the customers were shifting from Snapdeal to Flipkart and Amazon. An investor who closely follows this industry, he says that there was no commendable secondary management team in Snapdeal, which could evaluate the work of the co-founders, whether the decisions they are making are right or not. Now all this was going on inside the company, but.
Even in the market, Snapdeal has to face a lot of controversies. Like Aamir Khan, who was made the company’s brand ambassador a few months ago, in November 2015, made a comment on the intolerance in India, due to which he had to face a lot of backlash on social media. And this backlash had a very bad effect on the company. People started uninstalling Snapdeal and started demanding that Snapdeal remove.
Aamir Khan from the brand ambassador. Now all this was going on that the company, seeing its loss, started firing its employees. In February 2016, the employment department said in the middle that Snapdeal is forcing its employees to resign. Snapdeal forced almost 600 of its employees to resign from the company. Now when this happens, the employees go out to protest. And this thing gained a lot of media attention, due.
To which Snapdeal started losing more and more customers. Just understand this situation carefully. Now on the one hand, the employees of the company were going, on the other hand, the top employees also did not want to stay in the company. Anand Chandrasekharan, who had joined Snapdeal as the chief product officer, it has not even been a year since he joined Snapdeal that in May 2016, he resigns from the company.
After this, in January and February 2017, the company and two senior employees leave the company. One of them was the head of the company’s corporate development. Now the company is losing market share, removing its employees, leaving even senior employees. On top of that, there is a loss that it is not taking the name of stopping. In such a bad situation, where will the company get.
Money to run its operations? Plus, Snapdeal also tried to rebrand itself in September 2016, in which they made a new logo. They also launched a new marketing campaign called Unbox Zindagi, but none of these work. Why? Because the real problem was not outside, but was going on inside the company. Now do you think that in the company where so.
Much is going on, will anyone invest money in it? No, and this is what happens due to lack of funding. In March 2017, the main investor of the company, Softbank, talked about merging Snapdeal with Flipkart, but this could not be done. And in July 2017, the company’s chief strategist and investment officer, Jason Kothari, presented the Snapdeal 2.0 plan. In this plan, the company will sell its logistics and.
Payment business, and its e-commerce, which is its main business, will only focus there. Now this plan is moved forward, and in July 2017, Snapdeal Free Charge is sold to Axis Bank for 385 crores. After this, the logistics firm of Snapdeal, Vulcan Express, is bought by Future Retail for 35 crores. And finally, Unicommerce, which was a warehouse management firm, was bought by Infibeam for 120 crores.
Then in FY 2018 and 2019, Snapdeal joined more than 60,000 new seller partners and 50 million new products on its platform. And with this, if you look today, 5 lakh sellers and 200 million products are listed on Snapdeal. Transacting customers increased to 2.2x, and traffic increased to 2.3x, reaching 70 million unique customers per month. But after Snapdeal 2.0 plan, new customers were also joining the company.
Take a look at this data. In FY18, 8.99 million. In FY19, 19.60 million. And in FY20, 27 million new customers shopped from Snapdeal. Then the COVID-19 lockdown came, where the company got even better growth. In the lockdown period, the company acquired 6 million new customers and more than 20,000 sellers. Then after COVID, in November 2021, the company replaced Kunal.
Bahl and announced its new CEO, Himanshu Chakravarty. Just a year after joining them, in December 2022, the company announces that it is going to bring its IPO. But this comeback is very expensive and challenging. Because today Flipkart has an 8% share of the Indian e-commerce market. Flipkart has a 48% share in the online smartphone and 60% share in the online fashion market. Because of this, today Flipkart is the leader in both.
The segments. Also, Flipkart’s parent company Walmart is the biggest retail chain in the world. Then in this race, the second number is Amazon, which has a 32% share in the market. Now both these companies have a lot of money and a good market share. That’s why Snapdeal is having a lot of trouble making its place in the market.
But it’s not like Snapdeal can’t come back. Because if you look at the data, Flipkart’s YOY growth is 21%. Amazon’s is 13%. But at the same time, Misho, which is a completely new brand, is competing with both these giants. And the company still has 80% repeat customers. So just like Misho is making its hold on the market very quickly, in the same way, Snapdeal can also.
Come back if it wants. But what will happen next in this e-commerce race, only time will tell.
