Snapdeal Is Planning A Huge Comeback With A New Business Model!

Once dubbed as one of the biggest e-commerce companies in India, the journey of Snapdeal so far has been one of the worst any company has ever seen. After reporting a 75 percent loss last year and how the company saved itself from being taken over by rival Flipkart, the e-commerce firm, which was once the second-largest in the country, is planning a big turnaround in 2018.

The company is getting back to business and has started with selling its cloud-based inventory management subsidiary, Unicommerce to Infibeam for $17.8 million (around 120 crores). The fresh funds will help the company to boost up its promotions and offer more discounts.

The Growing Numbers Of Snapdeal

The daily orders have doubled to 40-45,000 from a low of around 20,000 in 2017 when the company reported a Rs. 5,000 crore plus loss. In a new model, the company has started to focus on selling items at high-frequency and with more low-price products to price-sensitive customers.

If compared with the second tier e-commerce companies in India, Paytm Mall is clocking around 55,000 orders daily including its recently launched online-to-offline hyperlocal deliveries. ShopClues stands at around 70,000 daily orders.

The order volumes have seen a sharp increase with an average order value of around Rs 1,000 to 1,200. The company earlier used to focus on selling higher priced items to give Gross Merchandise Value (GMV) a push where the orders used to range from Rs 2,000 to 2,400. In comparison, the average order value for ShopClues is around Rs 800 and Paytm Mall has an average order value of Rs 2,600.

New Targets – Being Profitable & Getting New Customers

The company is targeting to have a positive cash-flow by the end this fiscal as Snapdeal is focusing on profits. The assortment of the items in the low-margin categories has reduced. Snapdeal also made some big changes in its top management to work on some of the key initiatives.

The company has started to focus low-priced consumables like general merchandise, apparel, budget smartphones, shoes, refurbished phones, smaller appliances and more.

The new business model has helped the company to cut down its running expenses. The company has successfully reduced its monthly operating costs to about $1 million from $8-10 million in 2017. Currently, Snapdeal has around Rs 700 crore in cash reserves.

The Unicommerce Deal

Snapdeal sold its cloud-based inventory management subsidiary, Unicommerce to Infibeam. The deal closed at $17.8 million (about 120 crores) with Infibeam issuing convertibles preferential shares to the seller.

Snapdeal acquired Unicommerce in 2015 for $40 million and sold it at a 55 percent lower price. The cloud-based management company has earlier reported 100 million orders last year with over 10,000 sellers on its platform.

The new deal will bring in more funds for Snapdeal, and as the company is getting ready for a second innings in the Indian e-commerce industry, it will be interesting to see how the company plans its future moves to take on the competition.