The fall and fall of Snapdeal: Why its market share

slipped from 26% to 4%

Snapdeal is an Indian e-commerce company based in New Delhi, India. Snapdeal had
3,00,000 sellers, over 3 crore products across 800+ diverse categories from over 1,25,000
regional, national, and international brands and retailers and a reach of 6,000 towns and cities
across the country.
Investors in the company include SoftBank Corp, Ru-Net Holdings, Tybourne Capital,
PremjiInvest, Alibaba Group, Temasek Holdings, Bessemer Venture Partners, IndoUS
Ventures, Kalaari Capital, Saama Capital, Foxconn Technology Group, Blackrock, eBay,
Nexus Ventures, Intel Capital, Ontario Teachers' Pension Plan, Singapore-based investment
entity Brother Fortune Apparel and Ratan Tata.

Acquired by Snapdeal in 2015, Unicommerce services more than 10,000 sellers, brands, and
online retailers including Myntra, Jabong, and Lenskart.

1. No differentiation

Busy building too many warehouses and burning cash, Snapdeal

never built any category as their USP like Flipkart did with fashion and
electronics, and Amazon with Prime and Pantry.
“Snapdeal was not doing anything ground-breaking. Online retail, after
all, is also just retail. Your competitors are as good as or better than
you. If you don’t have a striking differentiation, why should a
consumer choose you over the others? Snapdeal failed to stand out—
they had the upper hand in no particular category or service,” says an
e-commerce expert who does not want to be named.

Additionally, Snapdeal’s tie-ups with ClearTrip, redBus, Zomato, and

UrbanClap for their respective services also failed to make any
impact.

2. Acquisitions for nothing

Many of Snapdeal’s acquisitions turned out to end poorly. The

exception is logistics firm GoJavas; but Snapdeal failed to capitalise it
long term, and it fell into the hands of Pigeon Express despite
Snapdeal's 20 million investment in it. Snapdeal's own logistics arm
Vulcan Express was also rumoured to be in talks for sale.

If Flipkart acquired Jabong and eBay India on their deathbeds, every

company Snapdeal acquired was at its peak. But as fate (or bad
administration) would have it, Snapdeal’s acquisition of FreeCharge
also failed to make waves for the company, as Paytm continued to be
the leader in digital payments and FreeCharge failed to capitalise on
demonetisation like Paytm. FreeCharge is now rumoured to be close
to acquisition by Paytm.

Snapdeal’s earlier acquisition of Exclusively.com, for luxury fashion,

bombed in less than a year.

3. Omnichannel downfall

The failure of Snapdeal’s omnichannel strategy stands out in its list of

downfalls. When it was launched in October 2015, many experts saw
it as a possible game changer for Snapdeal. Organised retail in the
country itself is becoming increasingly omnichannel, with
conglomerates like Tata (with TataCliq) hopping onto the e-commerce
bandwagon. It had promised that customers can discover products
online and order with faster hyper-local fulfilment executed by offline
retailers.
It also lets users to access value added services including
demonstration, installation, activation or returns at a store near them.
Importantly, with this customers will be able to procure products within
two hours of ordering and access these services at the nearest store if
they chose the pickup option across 70 cities in India. (This service
was not available for cash-on-delivery purchases.) This model had
great potential—with initial tie-ups with Mobile Store, Shoppers Stop,
etc. With efficient implementation, it could have given Snapdeal a
turnaround, but failed to make waves due to strategic
mismanagement.

On the other hand, may be the time was not perfect for this launch. To
provide touch and feel as well as lesser delivery time for the
customer, all parts of the system should work out. If offline retailers
are not fast for pick up, the whole system can collapse. Yet, Snapdeal
was able to reduce returns from over 10 percent to minimal for large
electronics with this initiative, according to the person mentioned
above. Its supply chain costs were also cut by one-third at the pilot
level.

“Around Rs 10 crore only was invested in it since it was a low-key

effort. But it needed creative partnerships and technology hacks. For
inventory in offline network, they used order fulfillment software
Unicommerce. But it stuck on the main tier-1 Snapdeal stack. Every
time an update happened, the Unicommerce system went for a toss
as it was not well integrated. Net promoter score (NPS) in those
categories went up to 25–50 percent. Customer experience bettered
while delivery time decreased; costs were minimal as return was
almost zero,” says the senior executive. But due to “egos at play,” this
person adds, there was no collaboration between the technology and
business, and the opportunity was lost.

Supply chains work very differently for grocery than they do for other
items; but Snapdeal had GoJavas—one logistics firm which experts
swear by. The Delhi-NCR region could have been a great place to
pilot, say experts, as Grofers - which currently has an upper hand-
started only in late 2013.

Snapdeal also had the highest number of fulfilment centres for any
online retail platform in the country—69 across 25 cities, while
Amazon currently has 27 and Flipkart 26. This could have been a
major strength had they attempted to push the furniture category—
one which demands impeccable logistics due to the possibility of
damage. Also, Snapdeal being based in Gurgaon had an advantage
considering the fact that the furniture manufacturing industry is
concentrated in the Rajasthan belt. The category is yet to make profit;
but there is no denying that it is one of the highest margin categories,
and the online market is nowhere near saturation.

Lack of democracy

It’s not the money or brand, but culture that inspires your team
members to work hard. But in Snapdeal’s case, sources say, this was
lacking. “Co-founders Kunal Bahl and Rohit Bansal never allowed
others to participate in decisions or shares. Many senior officials left
Snapdeal—even those with five years of experience there—due to the
autocratic structure within the organisation,” a former senior employee
says on the condition of anonymity.

Rohit and Kunal, before taking the 100 percent salary cut, were both
reportedly drawing an annual salary of Rs 46 crore. An investor who
has closely observed the industry says Snapdeal had no
commendable secondary management team. “Long-term planning
was not something Snapdeal did best. Besides Kunal and Rohit, there
was no major executive who could lead the company, like Kalyan
Krishnamurthy could do for Flipkart,” says this person.

No golden touch

'Snapdeal Gold'—the free service that needs no registration—followed

the launch of Amazon Prime, which charges Rs 499 annually. Under
this offer, the customer can get next-day free delivery in select areas,
and standard free delivery everywhere else. Also, returns can be
made in 14 days instead of the usual seven days. Orders placed with
cash-on-delivery do not get this offer.

But Customers wanted a better experience, not just fast delivery.

Snapdeal claims that this service was aggressively pushed following
demonetisation last year, and now more than 20 percent of the order
volume at Snapdeal is shipped through Snapdeal Gold. However, that
metric does not look great when compared to Amazon Prime's.
Amazon claims that one in every three orders placed on its platform is
from Prime customers, despite being a paid service.
End of the story

It is said that when the going gets tough, the tough get going. But this
Unicorn has lost its zest, and cannot charge forward anymore—too
many initiatives and not following through have resulted in its
downfall. Despite some interesting innovations and services,
Snapdeal was not able to create an offering the customer could not
live without.

If e-commerce is to see consolidation, Snapdeal’s acquisition will be

the first big event to lead the way. In fact, this acquisition can give a
fresh lease of life to Snapdeal. After all, Jabong gained positive unit
economics after it was acquired by the Flipkart-Myntra alliance. The
founders (and existing investor Nexus Venture Partners) pouring in
Rs.113 crore in a surprise move also shows that the stakeholders
have not lost all hope yet.

For the growth of any industry, a majority of players have to die

down–just like the theory of ‘Survival of the Fittest’. But the positive
momentum that comes with this wave can create more players, bring
in more money, and give way to more innovation.
Less focus on quality, lack of a unique value proposition and missteps on the marketing front
led to the fall of Snapdeal, according to report by research and advisory firm RedSeer
Consulting.

Ex

Snapdeal’s revenue jumped 73% and losses narrowed significantly in the previous fiscal year, as the
company’s efforts to cut costs, shed assets and pivot to a pure marketplace model began to pay
dividends.

Jasper Infotech, which owns and operates Snapdeal, reported a consolidated revenue of Rs 925.3
crore compared to the year-ago period when topline came in at Rs 535.9 crore, according to the
company’s filings to the Registrar of Companies (RoC).

Snapdeal reported consolidated losses of Rs 186 crore for the 12-month period ended March 31,
from a loss of Rs 611 crore in the previous fiscal year, the filings showed.
On a standalone basis, Snapdeal posted a revenue of Rs 899.2 crore, from Rs 527.5 crore a year ago,
while losses narrowed by more than 71% to Rs 187.4 crore for the same period.

This is the second year in a row that Snapdeal — which at its peak was valued at $6.5 billion — has
improved its bottomline, after embarking on a significant restructuring process following its failed
merger with larger rival Flipkart in mid-2017.

The proposed merger was orchestrated by its largest stakeholder, Soft-Bank. Over the last 24
months, the company sold most of its assets, with the exception of its core marketplace business.

Snapdeal said that it has trimmed its losses to from Rs 611 crore in FY18 to Rs 186 crore in
FY19, a year-on-year drop of 70%. Snapdeal's consolidated revenues jumped to Rs 925.3
crore in FY19 from Rs 535.9 crore in FY18. This is an increase of nearly 73%, the company

https://dsim.in/blog/2017/04/29/really-went-wrong-snapdeal-case-study/

https://www.businesstoday.in/current/corporate/snapdeal-fy19-losses-trim-revenue-up-indian-e-
commerce-major-kunal-bahl/story/365051.html

https://economictimes.indiatimes.com/snapdeal-failed-miserably-at-building-a-distinct-brand-
identity/articleshow/58909014.cms?from=mdr