I have over a decade in journalism with a career spanning across television, newspapers and magazines. I take a keen interest in politics, current affairs, cinema, and digital news. At Forbes India, I concentrate on economy, policy and government. I have a B.A. in English (Honours) from St. Xavier's College, Kolkata and have PG Diploma in Broadcast Journalism from Asian College of Journalism, Chennai. I have worked across the mediums of television, magazines and newspapers, and worked at NDTV, NewsX, India Today and The Week. When not working, which isn't often, you'll find me travelling, reading or playing with dogs. My epitaph would probably say, "journalist, idealist, dreamer".
It was February 2013. Winter was finally bidding farewell to Delhi. But for Kunal Bahl and Rohit Bansal, founders of online retail company Snapdeal, spring was nowhere in sight. The duo was staring at an uncertain future with only $100,000 in the bank and were looking at paying salaries of $1 million. One of India’s homegrown virtual marketplaces could all but hear its death knell.
The founders spent long hours discussing ways to tide over the crisis. Winding up the business was also considered. Two options were laid out at a meeting of the company’s top executives: Cut back on expenses or sack employees. “It was an intense time for everyone in the organisation,” says Bansal. In the end, it was an easy choice. “The decision was unanimous. We would not lay off a single person. Our business has no plant and machinery; we are a people-centric business.”
Fortunately, salaries weren’t delayed thanks to a timely venture debt of $1.5 million from SVB India Finance (since renamed InnoVen Capital), a subsidiary of Silicon Valley Bank. But while pink slips were not handed out, survival continued to remain top priority. “We knew that there would be a day when we would come out of this. But we wanted to come out as a strong team and not an impaired company,” says Bansal, 32, also the COO. The pressure was palpable at Snapdeal’s Okhla office. “Expenses towards electricity, water, marketing were cut down… we paid attention to each and every thing. It was a very stressful time for Kunal [co-founder and CEO] and I because so many people’s lives were dependent on us.”
Cut to today. Snapdeal’s new Gurgaon office, set up in August 2015, is buzzing with activity. The company has been aggressively making talent acquisitions, hiring over 20 senior management executives in the last year alone. It occupies a major chunk of the etail market today—32 percent according to a Morgan Stanley report. Ever since SoftBank Group Corp came in as investor in October 2014 bringing in $647 million in fresh capital, Snapdeal has acquired six businesses and snapped up majority stakes in two others. “We are very well-funded for the next couple of years,” says Bansal. It has also lured some top executives from across sectors to join its leadership team, some of whom have even relocated from the Silicon Valley in the US.
“It has been a fantastically impactful journey and an intellectually rewarding one,” says the 32-year-old Bahl. “But it has not been without its challenges. We easily have many more challenging days than rewarding ones.”
But there is no challenge bigger than the one ahead: Not only does Snapdeal have to become a one-stop shop for its consumers, it also has to build a self-sustaining ecosystem for itself—one that accommodates new-fangled business models, profitability and growth goals, innovation, etc. All this even as homegrown rival Flipkart steams ahead of it, and global giant Amazon breathes down its neck.
Think Snapdeal 2.0.
And the company seems to be on its way. From getting into a payments platform through its acquisition of FreeCharge and setting up offline platforms that bridge the gap between virtual stores and brick and mortar ones, Snapdeal has taken a few steps in the right direction in the last year and a half. “We changed our model six times to get here. And we are still pivoting and evolving. If companies don’t evolve, they will die,” says Bahl.
The company received its first round of funding of $2 million in September 2009 from Indo-US Venture Partners and $10 million in January 2011 from Nexus Venture Partners. “We chose Snapdeal because of the smarts and agility of the team. They had just pivoted from a corporate deals aggregation service to consumer deals online. They had strong marketplace DNA—deep insight on SME needs in India and what Indian consumers are seeking,” says Suvir Sujan, co-founder & MD, Nexus Venture Partners. In September 2011, Snapdeal transitioned into an online marketplace for products.
However, the going was never smooth. “Our journey has been far more jagged than that of most breakout tech companies in India,” says Bahl. “Most breakout companies started in the business that they are in. But we started as a company that published coupon books.” Money trickled in with every fresh round of funding but big money always eluded the company. “For a while, Snapdeal’s business model and focus was changing and they were also up against a well-funded competitor like Flipkart. So the incoming investor would have found the risk to be too high,” says Avnish Bajaj, managing partner, Matrix Partners.
After the founders took a loan from SVB to tide over the crisis of 2013, a bridge loan of $11 million had to be taken (in February 2014) from investors. Eventually the founders, even with financial constraints, efficiently moved towards building their online marketplace model. This got the investors comfortable.
But it was only after the eighth round of fundraising that the company finally developed muscle and had the freedom to call the shots.
A combination of factors swung the deal in Snapdeal’s favour. “What convinced us was that combining the units multiplied growth. We could tap into existing customers rather than acquiring them,” says Shah. Snapdeal also allowed FreeCharge to remain a separate entity with Shah as CEO. “Indian ecommerce companies will realise in time [what] we realised 7-8 months ago when we acquired FreeCharge. If you look at eBay and PayPal, TaoBao and Alipay, ecommerce companies became successful as they were in association with a payments company and vice-versa,” says Bahl.
The ecosystem had started taking shape.
“Many ecommerce companies are changing their focus from valuations and growth to profitability as raising capital becomes difficult,” says Sandeep Ladda, partner and national leader of the technology and ecommerce sector, PwC India. Snapdeal is emphasising on profitability too. In a market that is still obsessed with GMV, Snapdeal has set ambitious targets to start making money. “If you start with GMV as a primary goal, there are many ways of reaching it. It can be the outcome of all that you are doing, rather than the starting point,” says Bansal. “We are very long term in our running of the business. What we care about is that in 10 years, are we as a company creating real value and impact for millions of people or not?”
Nonetheless, the company has performed impressively on GMV too, moving from $1 billion in August 2014 to $4 billion at the same point this year. Flipkart is only marginally ahead with $4.5 billion. “We want to get to a GMV that makes the company profitable in 3-5 years; that number would be the $15 billion mark,” says Bahl.
Snapdeal’s focus on financial services and forays into newer business models has been noted by industry experts. “This is an inevitable evolution as there is great ease in doing business,” says Abhijit Joshi, founding partner, Veritas Legal, who helped seal the omni-channel deal between Snapdeal and Shoppers Stop.
The online marketplace has started an offline interface that will allow customers to browse and transact online but enjoy supporting services offline. Tie-ups with The Mobile Store and Michelin Tyres along with Shoppers Stop have been kicked off, and more collaborations are to follow.
Snapdeal’s Chief Technical Officer (CTO) Rajiv Mangla has termed the omni-channel platform ‘Janus’, after the two-headed Roman god. Says Bansal, “Even 10-20 years from today, the lion’s share of commerce in this country will be offline. But is there an opportunity to make life easier by making this entire process smoother? Yes. Hence, omni-channel made perfect sense to us.”
An Amazon India communications representative said the company has “no plans of getting into offline selling”. Flipkart, however, has followed in Snapdeal’s footsteps and ventured into offline selling, calling it “assisted ecommerce” and restricting it to mobile phones for the time being. Smaller etailers such as Lenskart, HealthKart, CaratLane and Pepperfry have also recently tried their hand at offline.
“It is one of our big regrets not to be invested in Snapdeal,” says Matrix Partners’ Bajaj. “Snapdeal has a history of experimenting with a multitude of business models. The reality of ecommerce is that it is a war of discounting and attrition, which can only be won by somebody who has most amount of capital. If you have to win the war, you have to do something different and Snapdeal is doing interesting things.”
With SoftBank having brought in more liquidity, Snapdeal has been quickly picking up companies through what the founders term as “planned aggression”. These acquisitions were being done with the aim of widening the Snapdeal umbrella, bringing in various verticals under it. The founders confess that they took the cue from global majors such as Facebook and Google, with the idea of presenting consumers with the focussed services that would be tailor-made for their whims and fancies.
“About a year ago, we started realising that the future of ecommerce is not a monolithic platform. Facebook started talking about a clan of apps and we realised that it would start happening in the world of ecommerce,” says Bahl. Other than RupeePower and FreeCharge, Snapdeal has taken over Wishpicker, a gifting recommendation firm; Exclusively, a marketplace for luxury and premium products; MartMobi, an m-commerce startup; LetsGoMo Labs, a mobility solutions company; and Silicon Valley-based adtech platform Reduce Data. Another key move was to get into a strategic partnership along with a minority stake at logistics firm, GoJavas. Snapdeal is in advanced stages of talks for three more acquisitions.
The company has been in acquisition mode on the people front too. More than a dozen top management executives have recently joined Snapdeal. “The quality of our team is the most important ingredient in our business. It is critical for us to have the best team in the country. Someone told us when we started out that one must always have people better than oneself,” says Bansal. Govind Rajan, formerly CEO of Airtel Money, has joined as COO, FreeCharge and CSO, Snapdeal; Rajiv Mangla has joined as CTO of Snapdeal after a decade at Adobe; and former Aircel CFO Anup Vikal has come on board in the same capacity. Talent from the Silicon Valley, Rahul Ganjoo and Gaurav Gupta, have both joined as VP (Technology). “Snapdeal was transforming lives through technology. But I was primarily impressed with the leadership,” says Ganjoo.