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Snapdeal, the country’s largest pure-play value e-commerce platform by revenue, has filed preliminary documents for an initial public offering (IPO), joining the bunch of tech companies tapping the equity markets this year amid a record-breaking rally on Indian bourses.
The IPO comprises a fresh issue of equity shares worth up to ₹1,250 crore and an offer-for-sale (OFS) of up to 30,769,600 equity shares by selling shareholders, as per the draft red herring prospectus filed with market regulator SEBI.
Snapdeal’s founders Kunal Bahl and Rohit Bansal are not selling any of their holding in the IPO. Blackrock, Temasek, eBay, Intel Capital, Nexus Venture Partners, Tybourne, RNT Associates, Premji Invest and others will also not sell any of their shares.
Expenditure incurred on ad, sales promotion by e-commerce cos is revenue expense: ITAT
The proceeds of the issue will be used to fund growth initiatives, expand logistics capabilities and enhance the company’s tech infrastructure.
With over 200 million app installations on Google Play Store, Snapdeal is one of the top four online shopping destinations in terms of total app installations in India, as of August 31, 2021
Bharat-focused Snapdeal targets value-seeking, middle-income, price-conscious buyers who predominantly live in smaller cities of India. It receives more than 86 per cent of its orders from outside metro cities.
Value e-commerce, most promising growth segment of online market: Kunal Bahl, CEO of Snapdeal
More than 95 per cent of the products sold on Snapdeal are priced below ₹1,000 and over 77 per cent of the company’s business comes from repeat customers. Snapdeal has been unit economics-positive for the last three-and-a-half years due to its focus on high-margin categories and efficient management of fulfilment costs, according to the company.
Snapdeal’s delivered units have grown 86.3 per cent over the last two quarters from 4.61 million in Q4 FY21 to 8.59 million in Q2 FY22. Its net merchandise value (NMV) also grew 82.48 per cent over the last two quarters from ₹205.12 crore in Q4 FY21 to ₹374.06 crore in Q2 FY22.
Snapdeal’s ‘Bharat’ strategy
The company’s Power Brands, UniMove logistics platform, multi-lingual user support and discovery-based shopping approach that replicates the offline journey of buyers are some of the capabilities built by Snapdeal as part of its Bharat-focused strategy, according to the company.
Snapdeal plans to expand into omni-channel distribution through partner-driven offline stores.
As per a RedSeer report, the total addressable market for value lifestyle retail market in India was worth $88 billion (₹6.16 lakh crore) in FY 2021.
As per RedSeer, the overall online shoppers will grow from 150 million in FY21 to 350 million in FY26. Online shoppers from the emerging segment (‘Bharat’ shoppers) are expected to witness an approximately threefold increase, up from around 78 million in FY21 to around 255 million in financial year 2026.
According to RedSeer, mid-income buyers will account for 73 per cent of online shoppers by FY26 and will drive the growth of value e-commerce.
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