Focus on value e-commerce and defined path to profitability along with a order of promise from ONDC, could make FY24 the turnaround year for Snapdeal—once a leading player in India's burgeoning e-commerce landscape.
Chief Executive Officer Himanshu Chakrawarti said the plan to build their version of 'Snapdeal 2.0' has been set in motion.
"(We're) essentially trying to build the finest, value lifestyle destination. As far as value lifestyle segment is concerned, a large amount of this business comes from Tier 2 and beyond. That's why we say we're Bharat-focused," he told BQ Prime. About 75% of Snapdeal's orders come from Tier 2 cities and smaller cities, while bigger cities and metros contribute only about 25%, he said.
The e-commerce platform also underwent a major reorganisation in 2022. Co-founders Kunal Bahl and Rohit Bansal formed the AceVector Group; and Snapdeal, B2B SaaS platform Unicommerce and house of brands Stellaro Brands were consolidated under the group.
Since the e-commerce battle has heated up with Flipkart and Amazon becoming clear market leaders, Snapdeal has moved out of high-end segments, such as home appliances and electronics, and focused on smaller ticket-size items.
It now focuses on apparel, accessories, footwear, home decor, kitchen supplies and several other items. "We have some amount of consumer electronics, things like wearables and earphones. So, it's largely focused around all lifestyle categories, but in the value range."
Chief Executive Officer Himanshu Chakrawarti said the plan to build their version of 'Snapdeal 2.0' has been set in motion.
"(We're) essentially trying to build the finest, value lifestyle destination. As far as value lifestyle segment is concerned, a large amount of this business comes from Tier 2 and beyond. That's why we say we're Bharat-focused," he told BQ Prime. About 75% of Snapdeal's orders come from Tier 2 cities and smaller cities, while bigger cities and metros contribute only about 25%, he said.
The e-commerce platform also underwent a major reorganisation in 2022. Co-founders Kunal Bahl and Rohit Bansal formed the AceVector Group; and Snapdeal, B2B SaaS platform Unicommerce and house of brands Stellaro Brands were consolidated under the group.
Since the e-commerce battle has heated up with Flipkart and Amazon becoming clear market leaders, Snapdeal has moved out of high-end segments, such as home appliances and electronics, and focused on smaller ticket-size items.
It now focuses on apparel, accessories, footwear, home decor, kitchen supplies and several other items. "We have some amount of consumer electronics, things like wearables and earphones. So, it's largely focused around all lifestyle categories, but in the value range."
Snapdeal Chief Executive Officer Himanshu Chakrawarti. (Source: Snapdeal)
Snapdeal Chief Executive Officer Himanshu Chakrawarti. (Source: Snapdeal)
Basis this pivot, Snapdeal posted about Rs 563 crore in revenue from operations in FY22, up from Rs 510 crore in the previous year. It also posted losses of about Rs 510 crore, up nearly four times from Rs 126 crore in FY21, according to data sourced from the Ministry of Corporate Affairs. It has not filed its FY23 earnings yet.
"Over the last two years, it has been a journey of accelerating towards breakeven by finding the correct economics while doing the range right for consumers. We have been unit-economics positive for a fairly good period of time and over the last 18-20 months, we have made humongous progress on the profitability front, so much so that we are very close to profitability now," Chakrawarti said.
"I think FY24 is the year which is our turnaround year in terms of turning profitable as well as moving on to high growth and high profit rate," he said.
Snapdeal is backed by Softbank, which owns around 35% stake in AceVector, the holding entity. It is also backed by Kunal Bahl's investment firm Titan Capital, Ebay, Temasek and Ontario Teachers' Pension Plan Board.
It had filed for an IPO, but later withdrew its draft red herring prospectus citing market conditions. Chakrawarti said an IPO is not on their agenda for the near future.
"Going forward... we will have requirement of raising funds. When we have that, we will evaluate both the private and the public markets and we are not close to either of the two. Depending on that point of time, whatever is more suitable, we will exercise that," he said.
ONDC And Festive Season Trends
Chakrawarti said he sees the government-backed Open Network for Digital Commerce as something that would be a meaningful contributor to Snapdeal's top-line.
"I think ONDC is one of the most pathbreaking things which is happening in the Indian space... We are going aggressively live with them on multiple categories. So, you will see a lot of business coming in," he said.
With October setting in, a month marked by the festive season sales and higher-than-usual consumption, Snapdeal is gearing up as well.
"There's three aspects that we focus on. One is on the existing range, how we can work with sellers and partners over several months to come in with the best possible offers. The second aspect, which is important for us, is to bring in all the relevant merchandise. For example, lighting, festiveware, the extended amount of dry fruits, gift sets and others. The third focus (is) communicating it in a cogent manner to the consumers. Whether it is through notifications, or mail or WhatsApp, we try to personalise it," he said.
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