With the evolution of e-commerce in India, the most talked about website has always been the
market leader Flipkart.
But doing equally well in terms of business and growing at a much faster rate is
its competitor Snapdeal. A venture started by two twenty-four year old school
friends, has indeed been a magnificently successful brand. They have played a
major role in shaping the buying habits of today’s generation. They identified
opportunities at every step, tweaked their line of business, diversified where
they sensed high growth, made the best use of the funding they got from their
investors and succeeded to be one of the biggest players of the Indian e-commerce
industry.
Kunal Bahl, then 24 years of age, a
management student from Wharton School of Business, decided to start a business
with his school friend Rohit Bansal after a stint at Microsoft. Rohit, an IIT
engineer was then working with CapitalOne. With a total work experience of 18
months between both of them, they quit their corporate lifestyle and decided to
follow their childhood dreams. Life was easy and sorted for them; they had the
best degrees and the best jobs with substantial packages. But they chose to go
the hard way. That was the first time they spotted an opportunity. Indians are
generally misers and they love to save money. They love to shop during monsoon
sale, eat at restaurants that give discounts and prefer to buy the most
cost-efficient car. So, basically Indians love discounts. This insight paved a
path for the idea of a couponing and discounting business.
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| Snapdeal Co-founders: Kunal Bahl & Rohit Bansal |
They launched MoneySaver, an offline couponing
business in 2007. They were struggling at establishing this new idea and
realized they had to seek investments. They started cold calling investors
through their websites, as they weren’t sure who would be interested in
investing in this kind of a business. IndoUS Venture Partners were their first
investors in September 2009.
While their business was still
juvenile, a couple of merchants working with them suggested that Kunal and
Rohit could venture into the online market to carry their couponing business.
This casual suggestion kept them thinking. Internet was still in its nascent
stage in India. Online group buying deals were newly started by Groupon in the
United States. It wasn’t a tested business and as the golden law persists, it
is not necessary that a successful business at every corner of the world would
be successful in India as well. So, there was a risk, but a bigger opportunity
and the optimistic minds could not ignore it. They knew that they would get the
first mover advantage to be pioneers in the online couponing and group buying
deals segment. They brainstormed on how to go about it in January 2010. Soon
after that, they registered a domain and that was all that the Engineer-MBA duo
knew back then about an online business. On February 4, 2010 they took the
brave plunge and launched Snapdeal.com under the company named ‘Jasper
Infotech’. The site failed initially, and they made a lot of mistakes. But
however, they were extremely agile, they obsessively tracked the customer
preferences, and continued to rapidly revise and improve the platform. They
evolved and learned from their mistakes and kept moving forward by taking
intelligent risks and eventually things started working out well.
Snapdeal.com was started in February 2010 as a daily
deals platform. They gave discounted deals on restaurants, beauty salons, spas, amusement parks and many other entertainment services. Various budding business happily collaborated with Snapdeal since the deals attracted customers and got them recognition. Soon, Snapdeal became a sensational success in the country. But they realized that the growth in the daily deals platform was slow and would get stagnant after a point. Ecommerce was a budding industry in India. It had already become popular in the
developed countries. Websites like Ebay and Amazon had proved their mettle. In
India, Flipkart had then just ventured into the ecommerce world and had got a
decent response. The number of internet users in India was less, but the fact
remained that the growth rate of internet in India was the highest.
This was spotted to be great opportunity by Kunal
and Rohit. E-commerce was a risky industry since it was not easy to change Indian buying habits. But as it is said, big risk brings big money. Finally in September 2011,
Snapdeal tweaked their line of business and became an e-commerce company via a
marketplace model. The marketplace model is one in which the company does not own the
inventory. It engages different retailers to sell their products. It had successfully been implemented by Ebay in the US. Flipkart on
the other hand followed the Inventory-holding model of ecommerce, where in the
company itself owned the entire inventory and sold it to its buyers. No other private
retailers were involved.
The
move was fraught with risks at a time when most e-retailers in India were
inventory-led, but going the marketplace way really jump-started Jasper
Infotech, which runs Snapdeal.com, into the big league.
Today, Snapdeal
locks horns with e-commerce biggie Flipkart
and is nearing a billion dollars in sales. With 20 million registered users,
Snapdeal is one of the first and largest online marketplaces in India offering
an assortment of over 4 million products across diverse categories from over
20,000 sellers, shipping to 4,000 towns and cities in India. It has shown a
phenomenal growth rate of 600% in the last one year.
From an offline couponing business to an e-commerce company
nearing a billion dollar sales, the Snapdeal story narrates how young entrepreneurs
can create new business opportunities and build a legacy.
