Bengaluru: A Strategic Pivot in E-Commerce
Snapdeal, under the aegis of AceVector, is pivoting towards a robust expansion in the realms of fashion and apparel to bolster its foothold in the fiercely competitive e-commerce landscape. This strategic move comes during the high-stakes festive season when consumer loyalty ebbs.
CEO Achint Setia revealed that the company’s fashion and lifestyle segments have experienced a remarkable threefold growth this year, though specific metrics remain undisclosed.
Fashion—A Beacon of Growth
“Fashion has emerged as a preeminent category this year, arguably the fastest-growing within our portfolio. Presently, the lifestyle segment—including fashion, home decor, and kitchenware—constitutes 90% of our overall business, with fashion being the primary catalyst driving this expansion,” Setia articulated in a recent interview with Mint.
Leadership Change and Experience
Setia stepped into the CEO role in January, succeeding Himanshu Chakrawarti, who led Snapdeal and its subsidiary Stellaro Brands for three years. With over two decades of experience in marketing and strategic roles at companies like Myntra, Viacom18 Media, and Zalora Group, Setia brings a wealth of industry knowledge.
A Critical Festive Season
The festive period serves as a crucial window for all consumer brands and platforms, but this year is particularly vital for Snapdeal. The company is awaiting clearance from the Securities and Exchange Board of India (Sebi) to proceed with its public market listing.
The Importance of Timely Approval
“Receiving Sebi’s approval before the financial year concludes is critical for Snapdeal. Delays or the need for refilling would necessitate updates to their IPO documentation, reflecting an entire fiscal year of financial performance. Consequently, the festive season’s results will significantly influence investor sentiment, particularly amidst a tumultuous market,” remarked a senior e-commerce executive, who requested anonymity.
IPO Aspirations
In July, the firm submitted its draft papers for an IPO with the aim of raising ₹500 crore through a confidential route that permits withholding public disclosure of IPO details until later stages. However, Setia refrained from commenting on the progress of this filing.
A Challenging Competitive Landscape
Despite its early establishment, Snapdeal struggles to carve a significant niche among India’s top e-commerce players in terms of market share and transaction volume. Current industry estimates place Flipkart at the forefront with a 48% market share, followed by Meesho and Amazon. According to a Deloitte report published in October 2024, the Indian e-commerce sector is projected to experience a 21% compound annual growth rate (CAGR), anticipated to reach $325 billion by 2030.
A Foundation with Evolving Strategies
Founded in 2010 by Kunal Bahl and Rohit Bansal, Snapdeal initially launched as a daily deals platform before transitioning to a comprehensive marketplace in 2011. Throughout its evolution, it successfully raised over $1.8 billion from investors including SoftBank, Alibaba Group, Foxconn, and BlackRock.
Nevertheless, acute competition coupled with the absence of a distinct strategic growth plan has gradually undermined Snapdeal’s momentum in the e-commerce space.
Targeting Value-Conscious Consumers
The platform primarily serves municipalities outside major metropolitan areas, where value retail has gained traction. In this context, fashion emerges as the top growth driver—with over 80% of orders priced below ₹599 originating from small towns in India. Setia pointed out, “Our focus is on the value-oriented consumer, who could be located anywhere.”
Recent Investments and Expansions
In recent months, Snapdeal has channeled substantial resources into in-house festive campaigns along with technological enhancements for returns forecasting and logistics. According to Setia, the company has simultaneously broadened its seller portfolio, particularly from key regions like Tirupur, Surat, Ludhiana, and Agra.
The Apparel Market Landscape
A September 2024 report by market research firm Centrum indicated that the mass-market fashion segment constitutes 56% of India’s total apparel market. Nonetheless, offline retail continues to dominate, as companies like Tata’s Trent, D-Mart, and Vishal Mega Mart offer ample selections for price-sensitive consumers in smaller towns.
Competitive Challenges in Value Retail
While small-town India harbors a burgeoning online shopping demographic, Meesho has surged ahead of Snapdeal in these markets, particularly in the value commerce sector.
“Despite being positioned as an e-commerce platform for Bharat, Snapdeal does not command a robust standing. Competitors like Meesho, Flipkart, and Amazon have incrementally fortified their footprint in these regions, escalating the competition significantly,” noted Devangshu Dutta, founder and CEO of consulting firm Third Eyesight.
Market Dynamics and Growth Challenges
Moreover, the transient nature of consumer loyalty within the value retail segment complicates customer acquisition and retention, a reality that intensifies the cost of engagement, given the small ticket sizes and a fragmented supply chain. Ashutosh Sharma, vice president and research director at Forrester, commented:
“Snapdeal is diligently attempting to rejuvenate its brand. However, without a significant market share or a clear path to rapid growth in a crowded landscape, differentiation or innovative pivots become vital.”
Past Branding Efforts
Under considerable pressure, Snapdeal has made various attempts to rejuvenate its standing. In 2016, it allocated approximately ₹200 crore for a rebranding initiative aimed at cultivating a new corporate identity, but the outcomes have been minimally impactful.
Current Financial Performance
In FY24, Snapdeal reported flat revenue at ₹379.6 crore, with losses having narrowed by nearly 43% to ₹160 crore, primarily due to reduced expenditures.
A Stance on Quick Commerce
As the e-commerce landscape progressively shifts towards expedited deliveries, Snapdeal remains steadfast in its current operations. The firm has opted not to engage in the quick commerce sector, asserting that diverse types of online commerce each have their unique marketplaces.
A Focus on Core Competencies
“We are continuously investigating customer preferences. However, our current emphasis is on enhancing delivery speed and overall experience. Many orders are delivered the following day already. Quick commerce is not a priority because it requires a fundamentally different inventory management approach,” Setia stated.
Coexistence of E-Commerce Models
“I believe there is sufficient room for diverse forms of online commerce—traditional, value-oriented, and quick commerce—to coexist harmoniously,” Setia affirmed.
Industry Perspective on Different Models
Dutta echoes this sentiment, arguing, “It’s improbable that every consumer desires instant gratification, especially for lifestyle products that Snapdeal focuses on. Moreover, quick commerce entails distinct infrastructural and capability necessities.”
Source link: Livemint.com.
