Snapdeal

Matchmaking Model






Snapdeal is an Indian based company that serves Indian customers and has both Indian and International brands in its marketplace. Snapdeal features best priced deals on branded products like mobile phones, electronics, computer peripherals, apparels, cosmetics, perfumes, watches, bags, sunglasses, footwear, kitchenware and more. It has been rated as the number 1 e-commerce site in India by Dataquest/Sapient E-commerce Survey 2011.[i]

Snapdeal operates the digital B2C (Business to customer) marketplace,

that allows third-party sellers to sell their products on Snapdeal’s website directly to Snapdeal’s customers. Snapdeal operates a portfolio business model; the company at its core operates a matchmaking business model, where it connects online sellers directly to online buyers.

It also offers complimentary products such as delivery and logistical support to businesses to help encourage the use of its matchmaking platform.

History

Snapdeal was founded by Kunal Bahl and Rohit Bansal in 2010, initially as a group deals' site, akin to Groupon, offering customers discounts at restaurants, hotels, movie theatres and the like. [ii] The company had 70 per cent market share in the group deals and operated a matchmaking model. [iii]

The founders had seen how the giant Chinese online marketplace Alibaba.com worked and wanted to recreate the model.[iv] In 2011, Snapdeal became an online marketplace, as eBay was the only marketplace in India at the time. [v] The company’s business model therefore changed from a product business model to a matchmaking model.

Snapdeal is one of the fastest growing e-commerce companies in India with the largest online market place, as quoted by SuccessStory.com. [vi]

Snapdeal has partnered with several global investors such as SoftBank, BlackRock, Temasek, Foxconn, Alibaba, eBay Inc., Premji Invest, Intel Capital, Bessemer Venture Partners, Mr. Ratan Tata, among others. In October 2014, Snapdeal received $627 million funding from Japanese multinational corporation, Softbank.

Customers – Who They Are

Snapdeal has two customer groups; online shoppers in India, and small to medium businesses looking to expand their e-commerce sales across India by using Snapdeal’s marketplace.

Engagement – Value Creation Proposition

First customer group- Online Shoppers

Snapdeal creates value by providing them the widest assortment of 35 million plus products across 800 plus diverse categories from over 125,000 regional, national, and international brands and retailers, all in one marketplace. [vii] Online shoppers also benefit from free next day delivery and zero shipping charges.

Snapdeal expanded its offerings to customers to include online recharge and bill payments on the App itself. Customers are able to pay for prepaid mobile recharges, post-paid mobile bills, electricity bills in fewer than 10 seconds. [viii]

Second customer group- Online Sellers

In 2012, Snapdeal launched ‘Brand Stores’, an exclusive page which allows brands to create their own store on Snapdeal.com. Brands are able to benefit directly from Snapdeal’s vast consumer base of 18million subscribers and the company’s online presence across more than 2000 towns and cities. [ix]

Kunal Bahl, Founder &CEO, Snapdeal.com said, “With Brand Stores, the power will now be in the hands of the brands. They would now be able to decide the look and feel of their page, customize their product selection, and manage promotions and exclusive launches. Similar to how brands open stores in malls that cater to a particular geographic area, irrespective of the size of their operation, they can now open a store in an online mall through which they can supply locally, but sell nationally.”[x]

Brands also benefit from complimentary services; such as promotion and marketing support, Snapdeal expert insight trends on what’s selling, Snapdeal professional services which assist with photoshoots and catalogue development.

In 2015, Snapdeal introduced ‘Scan and Sell’ for its seller mobile app, which enables sellers to list their products for sale on the platform in less than 5 minutes with just a scan of the products barcode and keying in the pricing details. The company has simplified and automated the process of listing products to cater to the wide assortment of products available on its platform. [xi]

Snapdeal also helps businesses to expand their business by offering them low interest business loans through Capital Assist. As of 2016, Snapdeal has 3000,000 sellers on its platform.

Delivery – The Value Chain

Snapdeal’s website provides an online platform which allows consumers to select a range of products from different worldwide brands.

Brands can sign up to open their Brand Store on Snapdeal at a zero fee and create a product catalogue. The brands are able to get their documentation, photo-shoots, cataloguing done with the Snapdeal Professional Services network. Once listed, sellers are able to manage their online business via Snapdeal Seller Panel and Seller Zone Mobile App.

In 2016, Snapdeal set up six mega logistics hubs across Delhi-NCR and other cities to strengthen its warehousing. “With a total of 1 million sq ft warehousing space, these centres are designed as integrated facilities that combine warehousing, quality control and transportation to aid sellers”, Snapdeal said in a statement. [xii]

Monetization – Value Capture

As of January 2016, Snapdeal reported revenue of 107,588,600.00 GBP in FY 14-15. This is a 450% growth in the revenue from 19,269,600.00 GBP last fiscal.[xiii]

Snapdeal is looking to monetise its zero-commission marketplace. "We are working on monetisation and by the next quarter will introduce it in a phased manner," said Sandeep Komaravelly, senior vice-president. "We are looking at advertising on the platform and product listings on the platform to generate revenue” [xiv]

References

[1] Crunchbase. (2016). Snapdeal. Available: https://www.crunchbase.com/organization/snapdeal#/entity. Last accessed 8th September 2016.

[1] Sunny Sen. (2014). Supercharged. Available: http://www.businesstoday.in/magazine/features/snapdeal-flipkart-alibabacom-kunal-bahl-rohit-bansal/story/208582.html. Last accessed 8th September 2016.

[1] Sunny Sen. (2014). Supercharged. Available: http://www.businesstoday.in/magazine/features/snapdeal-flipkart-alibabacom-kunal-bahl-rohit-bansal/story/208582.html. Last accessed 8th September 2016.

[1] Sunny Sen. (2014). Supercharged. Available: http://www.businesstoday.in/magazine/features/snapdeal-flipkart-alibabacom-kunal-bahl-rohit-bansal/story/208582.html. Last accessed 8th September 2016.

[1] Success Story. (2016). Snapdeal Success Story. Available: https://successstory.com/companies/snapdeal. Last accessed 8th September 2016.

[1] Success Story. (2016). Snapdeal Success Story. Available: https://successstory.com/companies/snapdeal. Last accessed 8th September 2016.

[1] Snapdeal. (2016). About Us. Available: http://www.snapdeal.com/page/about-us. Last accessed 8th September 2016.

[1] Snapdeal. (2016). Snapdeal - Online Shopping India. Available: https://itunes.apple.com/ai/app/snapdeal-india-online-shopping/id721124909?mt=8. Last accessed 8th September 2016.

[1]Raghu Mohan. (2012). SnapDeal Launches Brand Stores. Available: https://yourstory.com/2012/09/snapdeal-launches-brand-stores-allows-brands-to-create-their-own-store/. Last accessed 8th September 2016.

[1] Raghu Mohan. (2012). SnapDeal Launches Brand Stores. Available: https://yourstory.com/2012/09/snapdeal-launches-brand-stores-allows-brands-to-create-their-own-store/. Last accessed 8th September 2016.

[1] Snapdeal. (2015). Snapdeal.com introduces unique Scan and Sell feature for sellers. Available: http://blog.snapdeal.com/snapdeal-com-introduces-unique-scan-sell-feature-sellers/. Last accessed 8th September 2016.

[1] The Economic Times . (2016). Snapdeal opens 6 logistics hubs to ramp up delivery operations . Available: http://economictimes.indiatimes.com/industry/services/retail/snapdeal-opens-6-logistics-hubs-to-ramp-up-delivery-operations/articleshow/53507393.cms. Last accessed 18th September 2016.

[1] Track in. (2016). Snapdeal Financials. Available: http://trak.in/tags/business/2016/01/20/snadeal-financials-loss-revenue-fy14-15/. Last accessed 8th September 2016.

[1] Payal Ganguly. (2016). Snapdeal looking to monetise its zero-commission marketplace. Available: http://economictimes.indiatimes.com/small-biz/startups/snapdeal-looking-to-monetise-its-zero-commission-marketplace-shopo/articleshow/51902806.cms. Last accessed 8th September 2016.

Disclaimer

Written by Halima Begum and edited by Danielle Reza under the direction of Prof Charles Baden-Fuller, Cass Business School, in September 2016. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2017



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