Snapdeal's Epic: Story Of Rise And Fall

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Snapdeal’s Epic: Story of Rise and Fall

Snapdeal, once known as one of the most trusted marketplaces, had the most dramatic rise and fall, challenges, and opportunities in the digital marketplace. From its inception till 2017, Snapdeal’s journey has been a lesson of innovation, competition, wrong decisions taken, and lessons learned.

Inception and continuous journey

Snapdeal Founders
Founders, Kunal Bahl and Rohit Bansal

Kunal Bahl and Rohit Bansal founded Snapdeal in February 2010. In the beginning, it was a daily deal platform as a coupon provider. Initially offering discounts on a wide range of products and services. Later, company officials found the scope of e-commerce business in India and they changed the website to a full-fledged online marketplace.

Early days and funding

Since the company started in the days when people started using smartphones and the internet, it has seen exponential growth in users as well as in business. Snapdeal‘s business model was to offer products at competitive pricing. The company attracted funding from good and big investors, including Nexus Venture Partners, Kalaari Capital, and Softbank, which added substantial capital to fuel its expansion. Ratan invested. Also, other investors were Ru-Net Holdings, Premji Invest, Tybourne Capital Management, Temasek Holdings, Blackrock, eBay, Saama Capital, Intel Capital, Ontario Teachers’ pension account, Singapore-based investment entity. Brother, Alibaba Group,  Foxconn Technology Group,  Bessemer  Indo US Ventures, Fortune Apparel

Story of Success

Snapdeal - Promotion
Entrance of a Mall with Snapdeal Advertisement

When Snapdeal was busy building too many warehouses they never worked on their USP in categories like Flipkart had fashion and electronics and Amazon had pantry and prime. By 2014, Snapdeal had a significant number of customers and a market share, and in March 2015, their total market share was 24% and September 2015 was the peak when they had a market share of 25%’. , Snapdeal has had the highest number of warehouses to Amazon and Flipkart.

Acquisition and Ventures

https://www.crunchbase.com/organization/snapdeal/company_financials

Snapdeal bought many companies but most of them failed. They bought Exlusively.com earlier but it shut down in a year. Also, they were in talks to acquire fashion marketplace VOONIK and e-commerce marketplace Zapyle but failed after some stages of discussions. The company acquired companies like Reducedata, RupeePower, Doozton, TargetingMantra, Reduce Data, Fashiate, MartMobi Technologies, RupeePower, Exclusively, Wishpicker, Doozton, Shopo, eSportsBuydotcom, Grabbondotcom. that did not give any fruitful result.

They bought GOJAVAS but failed to utilize it and finally sold it to Pigeon Express despite a 20 million investment in GOJAVAS. Another acquisition was FREECHARGE, which acquired 350 million and, for that, was a competitor of PAYTM but did not capitalize and, due to a loss, Snapdeal sold it to AXIS BANK for 80 million. Freecharge could be a game changer if it was done during demonetization but did not attract more customers and it was a loss deal.

Another big acquisition was Unicommerce, which was an e-commerce-enabled software used to manage warehouses and inventory. This platform was very popular with sellers who used to sell on marketplaces. Snapdeal acquired this company in 2015 in undisclosed amount. However, the company did not get fruitful results after the acquisition. Their tie-ups with redBus, ClearTrip, Urban Clap, which is now known as Urban Company, and Zomato for their respective services failed to make any impact.

 

Strategic Mistakes

There are several strategic mistakes including sales versions also. Due to those mistakes, their market share went from 25% to 4%.

snapdeal and others market share
Market Share Graph

https://timesofindia.indiatimes.com/tech-news/look-who-snapdeal-amazon-lost-market-share-in-2015-to/articleshow/51153638.cms

Inhouse Seller or Armband Seller

Every big company in e-commerce had its seller, like Flipkart had WS Retail and Amazon had Cloudtail and they were getting the maximum sales of their website from these sellers, whereas Snapdeal did not have any.

Omni Channel Failure

It could be a game-changer but didn’t happen. In this process, customers can order a product and pick up the order in 2 hours from any store and the offer is not available in cash on delivery. Tata Cliq had the same practice. Initially, Omni Channel started in 70 cities.

No Grocery and Furniture Category

The furniture and the grocery category was one of the big revenue generators of the e-commerce marketplace. In 2016, total sales of these categories were $25 Billion and $ 250 million sold online, whereas in 2020, $35 Billion was total sales and $750 million online. It was indicates that these two categories are getting a significant share in online sales. Snapdeal did not have either of these.

Value Added Service

Like Amazon, Amazon Prime gives benefits to shipping and delivering the order the next day in 499 rupees. In 2015 it said one in every three orders is a prime order. They also offer other benefits, like Amazon Prime Video. Snapdeal launched Snapdeal Gold and they started delivery on the next day delivery and also gave customers 14 days return time instead of 7 days, but at the end of the year, they got only 20% of orders, which was from Snapdeal Gold. Customers wanted more apart from shipping, which they did not have to offer, like Amazon Prime video.

Customer Version on Snapdeal

A lot of customers started claiming that they were receiving the wrong item, counterfeit items. Customers were receiving the items after the promised delivery day. There were a lot of complaints about late delivery and package mishandling. Some customers received bricks instead of phones, However, brick delivery happens with other websites too.

So, the latter one was instructions from the courier company if the package value is higher to ask the customer to open the package in front of the courier guy, and if there is any issue then can be addressed at the same time. Customers started moving to other marketplaces after September 2015 and Snapdeal started losing its business. They wanted to give a discounted product instead of having a loyal customer base. They never focused on it.

Boycott Snapdeal

amir khan
Snapdeal Brand Ambassador Amir Khan

It happened twice by some groups and many customers uninstalled the Snapdeal app and rated 1 or 2 on the Google Play store. The first time, it happened due to a statement by Amir Khan who was the brand ambassador for this company, and 2nd time there was some issue with Snapchat but it was communicated that Snapdeal had done this. If a company’s graph is going down, then a couple of factors about losing customers can be a lot and the same happens with this company.

Seller Version on Snapdeal

Sellers Basic Issue

I was also one of the sellers of Snapdeal and I have seen it very closely and know the views of a lot of sellers. Seller support of Snapdeal was not good and it even seems they do not keep the follow-up if you contact them regarding the issue. Every day they had technical problems with their panel and it was not easy to process the order on time.

They started increasing the commission on the items and there was a time when they were charged 2.5 times in comparison to other marketplaces. A lot of fraudulent orders started coming to the panel and the seller was supposed to pay for the shipping of those orders. We were getting a lot of COD returns. However, these were the general issues.

Account manager for the seller

Every account had an account manager who was visiting the premises of the sellers from time to time. But their only interest was to sell loans and advertisements. Most of the salespeople wanted to increase their business in an organic way but they wanted to get a part of the sale in terms of advertising for sale.

Big Strategic Mistake

Snapdeal started a process where every person has to send their products to a warehouse and all the orders will be fulfilled from there. Unlike Amazon, where you have the right to choose the product you would like to send to a fulfillment center and you can even do additional listing on Amazon as fulfilled by a seller. But this option was not available in Snapdeal.

They said that a seller can ship a maximum of 5 orders from their premises. When sellers sent their products to warehouses, some were lying for weeks and sellers started complaining about it but the issue was not resolved. Later on, Snapdeal asked sellers to get the items from a warehouse. When they went to pick up, they found that a lot of items were missing and this was done by the warehouse team members. A lot of complaints were about it but nothing happened.

In this whole scenario, Snapdeal was the only loser. They restricted the order to 5 and the buyer wanted the item and when they tried to purchase the item, it showed out of stock. So, they purchased from other marketplaces. So, the only loser was the policymaker.

Order Fulfilment Issue

During the sale, their fulfillment capacity, once finished, blocks the order from customers and does not take any more orders. However, small and medium sellers were at a loss as they were getting hardly any orders due to fulfillment capacity, whereas they also spent some amount on inventory and warehouses. On the other hand, some sellers were receiving orders on other marketplaces. So, they almost lost their trust in the company in return on investment. So, they started working with other marketplaces.

CEO and Management Decisions 

It was said that only both CEOs are making decisions and no other officials are involved in making decisions and improving the process so that a better working environment can be seen. Lack of democracy in decision-making was there.  Later, employees started resigning and leaving the organization. In 2016, there were some salary crises and strikes by employees as well.

Nikesh Arora
Former President of SoftBank, Nikesh Arora

Another big setback for the company was the leaving of Nikesh Arora from Soft Bank. He was president of Soft Bank.

Snapdeal Merger with Flipkart

Snapdeal Flipkart merger

https://www.businesstoday.in/latest/corporate/story/flipkart-snapdeal-deal-hindered-by-its-complexity-other-reasons-84185-2017-08-11

Sanpdeal was the only Unicorn e-commerce company that crossed first the market value of $1 Billion. In the middle of 2015, it reached $6.5 Billion. However, due to their internal policy and customer dissatisfaction, they started losing their business. Their customer share decreased from 25% to 4%. Flipkart tried to acquire Snapdeal and it was almost done. However, due to big opposition from investors, it did not happen.

Snapdeal 2.0

https://www.indianretailer.com/news/snapdeal-witnesses-14-pc-revenue-jump-fy-22

Since the merger did not happen with Flipkart, then the company started once again. It was called Snapdeal 2.0. However, as per their claim, they minimized some losses and gained new customers. But, the same number of customers did not start purchasing from Snapdeal. In the new system, they remove badly rated sellers and give benefits to good well-rated sellers. Their other policy is to involve manufacturers and ship the order directly from manufacturer to customer. We call it M2C(Manufacturer to Customer).

It was claimed that revenue from operations increased by 85% and traffic increased by 100%. Where 80-90% of orders are being received from non-metro locations. The company added 6 million new customers during the lockdown and 20K more sellers were added during that lockdown time.

https://economictimes.indiatimes.com/tech/technology/snapdeal-to-shelve-152-million-ipo-amid-tech-stocks-rout/articleshow/96101888.cms?from=mdr

Snapdeal aims to achieve profitability within the next quarter, as it bets heavily on the value customer base to drive growth, according to Himanshu Chakrawarti, CEO, Snapdeal Marketplace.

We are hoping that the company can do best in this sector. However, it is very hard to regain customers and build trust again.

#snapdeal #snapdealdownfall

Digital Marketing Services and E-Commerce Solutions in Delhi, India.

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AuthorFarhanul Haque

This article is written by the Founder of Digitamizer who has been working in the e-Commerce Sector Since 2006 and is also a certified Digital Marketing Professional from IIT, Delhi, India.

5 thoughts on “Snapdeal’s Epic: Story of Rise and Fall”

  1. These days, organizations often prioritize eliminating competitors rather than emphasizing their Unique Selling Propositions (USPs). Despite size, providing superior value can help retain customers. However, many companies now engage in a billion-dollar valuation race, leading to aggressive employee practices and fund acquisition, sidelining actual organizational development. It’s worth noting that giants like TATA, Microsoft, and Apple didn’t achieve their current status overnight; their success was built over time.

    Reply
  2. There was collaboration failure and wrong aquisition strategies.

    Secondly Snapdeal has not worked upon their own market share and rapport building was completely missing, given chances to competition.

    Specially in trading good partner selection and aggressive SCM are very much important to grow business in long term.

    Reply
  3. The growth and fall of Snapdeal is a familiar story in the tech industry. When it first appeared, online shopping was given a new perspective, and it quickly gained popularity. But difficulties including ferocious rivalry and operational problems contributed to its collapse. The Snapdeal narrative serves as a cautionary tale about the importance of adopting sustainable growth strategies and market dynamics adaptation. It serves as a timely reminder that sustained innovation and a firm grasp of customer demands are essential for success.

    Reply
  4. This is informative insight about e-market business model.
    Same time its saf also how a competing in stablished domain without core competition kills enterprise

    Reply
  5. This blog post offers a comprehensive and enlightening analysis of Snapdeal’s journey, highlighting both its triumphs and missteps. It’s refreshing to see an honest examination of a company’s ups and downs. Snapdeal’s experiences serve as a valuable resource for entrepreneurs and businesses, showcasing the significance of customer-centric strategies, adaptive decision-making, and learning from mistakes. A commendable effort in sharing valuable insights that contribute to the growth and resilience of the business community. Well done!

    Reply

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