Alibaba backed Snapdeal is now attempting for horizontal expansion, as they have decided to diversify into travel and food niche. Users of Snapdeal can now book & flight bus tickets, and order food as well.
At a time when global ecommerce biggies like Rakuten is entering India; & rivals like Flipkart have already started offering travel services, this can be described as a major diversification decision to gain market share and increase users.
In order to provide seamless travel services and online food order deliveries, Snapdeal has initiated strategic partnerships with Cleartrip and Redbus for travel and Zomato for food orders. App users of Snapdeal can view icons of these services, indicating that its a long term alliance.
Snapdeal announced this expansion into travel niche by offering a flat Rs 400 discount on domestic tickets.
Commenting on this alliance, Ashish Kashyap, founder and CEO of Ibibo Group, (owner of Redbus) said, “Getting the inventory and the price is a commodity business… But these are mega malls with many buyers. For Snapdeal, travel will never be its main business, for us, it is,”
Meanwhile, an official from Cleartrip said, “Snapdeal will have access to our flight inventory, and we will share a portion of our commission with them,” It is a common knowledge that Cleartrip makes around 3-4% on each flight ticket; and as per insiders, Snapdeal will charge 40-50% of this commission for every ticket booked.
Zomato, Cleartrip and Redbus have actually opened up their Application Programming Interface (API) with Snapdeal, using which their developers have created special platforms for travel and food ordering. Hence, without leaving Snapdeal’s platform, users can now seamlessly order food or book flight/bus tickets.
Snapdeal is India’s 2nd most valued startup, after Flipkart, and during 2014-15, they incurred loss of Rs 1319 crore while generating revenues of Rs 938 crore. Compared to 2013-14, Snapdeal registered growth of 450%.
In February, Snapdeal raised $200 million at a valuation of $6.5 billion; and within last months, they have successfully increased their valuation by 40%.
It would be interesting to observe how they are able to make inroads into highly lucrative travel niche, and ever expanding online food ordering business."Snapdeal Diversifies Further: Users Can Now Book Bus, Flight Tickets, Order Food!",