Expects sales to top $1 billion in 2014-15; eyes US listing
Snapdeal.com, touted as India’s largest e-commerce marketplace, is set to raise about $150 million in its next round of funding.
The company has raised slightly over $100 million in funding so far. The money raised from the new round of funding will be used to upgrade technology, for marketing as well as acquisitions, sources in the company told Business Line.
Nexus Partners, Indo-US Venture Partners and Bessemer Venture Partners have invested in the company in three rounds of funding till now, the last of which was nine months ago.
Snapdeal CEO Kunal Bahl refused to confirm that the company would go in for an additional round of funding. But he said the company was seriously looking at listing itself on a bourse in the US as SEBI now allows companies to list abroad without listing on an Indian stock exchange first. “Given our profitability curve, we can consider going public in a couple of years,” he said.
Bahl predicted that the company would have sales of around $1 billion in 2014-15 compared with a half a billion dollars during the current fiscal.
Snapdeal, which follows the marketplace model, has about 20,000 sellers on its platform and offers four million products.
“When we looked around, the e-commerce sites were largely buying and selling branded products, not solving any issues but taking away space from retailers. We saw sellers who have great products but do not have the avenue to sell their wares nationwide,” said Bahl.
So, he added, Snapdeal created a platform that sells products directly to customers, without holding inventories. The inventory-led business cuts out traders or small businesses, he pointed out.
Snapdeal also does not own any logistics company but uses several courier companies across the country to deliver products to customers. “This way, the right people make money. Sellers make money and we make money because we are facilitating transactions but those players who do not add value get cut out,” added, Bahl, who is also a co-founder of the company.
The e-commerce Web site adds about a couple of thousand sellers every month and offers customers the option of taking back their money if they are not satisfied with a product. “All the money buyers have paid sits in an escrow account for seven days and then it goes to the seller. This way, it keeps the sellers honest and also gives them an opportunity to rectify their products if there are any flaws,” he said. If there are several complaints against the seller, his rating goes down and eventually he is not seen in the platform.
Bahl said the company expects to turn profitable in the next one year but added that no inventory-led e-commerce platform has become profitable so far.
“We have no capex. There is zero cost for us to get incremental sellers and limited cost to get incremental buyers. These 20,000 sellers are organic they have come directly to us through our site. And 80 per cent of buying traffic is also organic,” said Bahl. “Because there is a strong organic supply and demand, your need to invest to propel supply and demand gets lower and lower. As we get larger and larger, it gets lower and lower and this has propelled our growth.”