SoftBank-backed Indian e-commerce player Snapdeal on Tuesday announced that it has significantly increased revenues and cut down on losses after sailing through turbulent times in the past months.
“July 2019 marks two years of Snapdeal 2.0 – our focused strategy to pursue growth in terms of real revenue with good economics and enhanced customer experience,” said Kunal Bahl, CEO and Co-Founder, Snapdeal in his Linkedin post on Tuesday.
The company owned by the privately-held Jasper Infotech announced that it reduced its losses by almost 71 per cent to Rs186 crore in the year ended March 2019 (FY19). This is significant given that its losses stood at Rs 611 crore a year ago in FY18. Its consolidated revenues surged 73 per cent to Rs 925.3 crore in FY19 as compared to Rs 535.9 in crore in the previous fiscal.
Snapdeal also claims to have posted profits in June last year.
Cut to July 2017, the company had made headlines for reasons more than one. First, its talks of a merger with larger rival Flipkart had failed over valuation issues. Second, it had slashed a majority of its workforce to keep its bottomlines intact. Three, the company had come up with an alternate plan called Snapdeal 2.0 that was devised to chart out another growth path that was meant to see a ‘leaner Snapdeal’ operating a platform connecting buyers and sellers, sans additional services such as logistics.
“Two years ago, we were coming off a challenging patch for our company. However, disciplined and focused execution by our team over these past two years shines through in our audited financial results, which we have released today,” said Bahl in a statement. “Not only this, our transacting customers grew 2.2X and traffic surged 2.3X to 70 million unique users/month. And all this in a year when the e-commerce companies in India burnt through ~USD 2.5 billion in the pursuit of growth,” he added.
So, what is the strategy that Snapdeal has adopted over the past two years? The company has shifted its focus from metros and tier I cities to smaller Indian towns. But, has that worked?
“About 80 per cent of our business comes from small towns and cities, where time is not at such a relative premium. Users like to spend time to browse the selection, find joy in the hunt for new and interesting products and also discover attractive bargains in the process,” Bahl said. This market, he said, is worth $163 billion and comprises nearly 400 million potential buyers.
In the last two years, Snapdeal has added 60,000+ new seller partners, who have added over 50 million new listings. The e-commerce player now has more than 500,000 registered sellers, who have more than 200 million listings on the marketplace.
Snapdeal also kept hiring new people in the past two years and claimed that over 100 former team members have rejoined the company. “There could be no better validation of our progress and culture than this,” Bahl said.
Going forward this year, the company intends to temper growth to address identified parts of the process that are impacting the user experience. Thereafter, it will ramp up investment in growth.
“We are not aiming for triple-digit growth rates, as we don’t believe that one can achieve them without compromising on parameters that we consider critical – economics and experience. Consistently compounding revenue growth create large and valuable enterprises,” he said.
So, is the worst over for Snapdeal?
The buzz is that the online marketplace is close to buying its nearest rival ShopClues in an all-stock deal.
If talks fructify, the deal will mark a significant consolidation move in the e-commerce market that will help Snapdal beef up its presence in tier II/III cities, away from its core market where e-commerce companies Amazon and Flipkart dominate.