Info-tech

Will Snapdeal turn lucky in its 2nd avatar?

Sangeetha Chengappa Bengaluru | Updated on January 09, 2018 Published on August 01, 2017

A clean slate: Snapdeal will lay off 80% of its workforce, adopt a lean operations model with continued focus on cost cutting   -  REUTERS

Experts say, for the firm to succeed, it will have to ‘choose its battles’, and not try to compete with Amazon, Flipkart

As Snapdeal vacates its number three position in the Indian e-commerce market to embark on a new independent path inspired by Chinese marketplace Taobao, will founders Kunal Bahl and Rohit Bansal turn lucky with its second avatar?

Snapdeal 2.0 aspires to be an “open marketplace” which will onboard a large number of sellers, especially local sellers very quickly at minimum cost and effort, offering both B2C and C2C play.

While B2C sellers will dominate the marketplace at first, the company says it will also encourage C2C sellers.

To make this work, Snapdeal will lay off 80 per cent of its workforce, adopt a lean operations model with continued focus on cost cutting.

Pivoting the business model and donning a whole new avatar is not new to Bahl and Bansal, who started their entrepreneurial journey by physically selling merchant coupons to customers, which fizzled out with no takers.

In 2010, Snapdeal started off as a daily deals platform, which was changed on popular demand, from selling services to selling products on an Alibaba-inspired online marketplace business model, empowering thousands of small sellers who listed their products on Snapdeal to sell directly to shoppers. This, at a time when other e-commerce players followed inventory-led models.

Hibernation period

Half a dozen analysts whom BusinessLine spoke to were of the view that Snapdeal is out of the e-commerce rat-race, at least for the next 2-3 years, after which it will emerge as one among the smaller niche e-commerce companies, provided it continues to invest in a differentiated value proposition to a focussed target audience.

They said, valuation alone doesn’t keep a business alive and the Snapdeal fiasco provides a wake-up call to start-ups that they should not take investors or consumers for granted.

“If Snapdeal is considering disrupting the e-commerce market in the short term in its new avatar by competing with Flipkart and Amazon, it will most definitely not succeed.

“Snapdeal will not be a force to reckon with, at least for the next 2-3 years, unless it considers creating an eBay kind of marketplace model which is largely a C2C play, involving very little cash burn,” said Anil Kumar, founder CEO at RedSeer Consulting.

Snapdeal 2.0 will require the company to adopt a different, specialised approach to ensure it can continue to survive and thrive, believes Sanchit Vir Gogia, founder and CEO, Greyhound Knowledge Group.

“It must have a mix of well-established product categories like consumer electronics and fashion, along with categories that are yet to become mainstream — such as groceries and specialised apparel, including outdoor-wear, sports-wear, etc.

“Snapdeal will have to choose its battles from here on, and not try to compete with Amazon or Flipkart to succeed,” he said.

Investments

On the brighter side, Kumar pointed out that investors will still be interested in pumping money into Snapdeal on the basis of their experience (failures) and at the right valuation, if the board approves its attempt to raise fresh investments.

“At its peak in 2015, Snapdeal had 30 per cent market share; it can still emerge a significant small player if it gets its act right.”

Published on August 01, 2017
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