These are shoppers who are on a budget and aspire to own quality products that may not be accessible to them in the markets of their smaller hometown stores.
New to the internet, they are exploring e-commerce websites to buy trendy, fashionable goods of great quality within their means.
The growing number of such value-conscious online shoppers from India’s smaller cities and towns is reshaping India’s e-commerce landscape.The growth of online shopping is due to consumer preference for larger assortments (than what is available in their physical proximity), attractive pricing, seamless “no questions asked” return policies and cash on delivery options.
The convenience of availing services at their own time and place, the availability of product videos and vernacular descriptions are some of the other factors contributing towards the expected fast growth of value e-commerce.Snapdeal focuses sharply on a select range of products with affordable prices, good quality and high-touch customer experienceAccording to RedSeer’s market study commissioned by Snapdeal in August 2021, the total addressable market for value lifestyle retail is expected to reach USD 175 billion by FY 2026, growing at an approximate CAGR of 15%.
Today, 75% of the value market is served by unorganized, physical retail channels, while the balance 25% is served by organized brick and mortar and value e-commerce channels. By FY 2026, the share of value e-commerce alone will rise to 22% and is estimated to grow faster in the Tier 2+ cities.
Leveraging this enormous opportunity, value-focused platform, Snapdeal’s business model comprises a full-stack value playbook that is helping it serve this underserved and fast-growing mega cohort of value-conscious consumers.
It has chosen to focus sharply on a select range of products with affordable prices, good quality and high-touch customer experience.Components of Snapdeal’s full-stack value playbook:Affordable merchandise from quality-focused sellers: Snapdeal consciously works with a select base of reliable sellers to maintain high quality of products on its platform.
Snapdeal follows a six-point quality management including sample quality checks through mystery shopping, review and quality control of listings, sharing insights with sellers on catalog and content enrichment, analysis of feedback from customers and curation of assortment in partnership with sellers and so on.
Snapdeal also guides its sellers to consistently list new and trendy products, which enables the platform to showcase fresh selection to users when they visit Snapdeal. Snapdeal’s sellers also typically offer low pricing throughout the year and hence users can get best prices at all times, without having to wait for seasonal markdownsPower Brands: Users who shop on a budget desire the predictability of quality normally associated with brands, but they seek so at prices affordable for them.
Snapdeal has created 13 Power Brands across popular categories like apparel, fashion accessories, footwear, home and kitchen, health and wellness, personal grooming, etc. These brands are licensed to a select network of sellers who are capable of offering good quality products at affordable prices.
Snapdeal supports these sellers by providing appropriate design, quality and packaging guidelines as per their brand standards.
Snapdeal intends to grow its “Power Brands” portfolio by launching more such brands.Efficient multilingual user support for new and early internet shoppers: Snapdeal offers robust user experiences through high-touch and multi-channel customer support. Its customer support services include instant messaging with agents and chatbots on WhatsApp, telephonic conversations with live agents, self-help tips, FAQs and interactive voice response (“IVR”) menu or help-line number.
Its user support caters to the needs of all users, including non-tech savvy shoppers, and provides user support in various Indian languages.Discovery-led, personalized buying journey: Snapdeal utilizes AI, machine learning algorithms and data science to automatically personalize the user’s experience to their preferences. The discovery-based nature of Snapdeal’s interface helps users, including those who are new to eCommerce, find products that may interest them.
During the six months ended September 30, 2021, 60.25% of the orders placed on its platform were made through discovery and without using a search term.
Asset-light logistics platform: Snapdeal follows an asset-light logistics network and its deliveries are handled by several third-party logistics (3PL) networks.
Snapdeal’s UniMove logistics platform enables it to allocate specific legs of a packet’s transportation journey to different 3PLs.
This allows Snapdeal to reduce fulfillment costs and offer a better user experience with faster and more reliable deliveries, including in smaller cities and towns.SD Cirrus powers its proprietary technology stack: Snapdeal has developed its own platform and technology stack to tailor its platform closely to the needs of value eCommerce. It has minimized the need for outsourced technological solutions to reduce external dependence and operational expenditure. It maintains its competitive advantage via its own data infrastructure and cloud service, SD Cirrus, which enables it to launch new features in a short period of time.Expanding into omni-channel distribution: Snapdeal plans to expand into omni-channel distribution through offline stores, partnering with existing neighborhood shops and new franchisees across the country.
The offline channels will also help increase customer trust due to their ability to touch, feel, and try products.Smart positioning and executionMore than 95% of the products sold on Snapdeal are priced below Rs. 1,000 with over 77% of its business coming from repeat customers.
It has more than 40 million monthly active users – a monthly average for the six months ended September 30, 2021 – and has had over 550 million page views every month between April 1 to September 30, 2021.Snapdeal’s delivered units have grown 86.3% over the last two quarters from 4.61 million in Q4 FY 21 to 8.59 million in Q2 FY 22 (based on the count of units of shipped orders during the six months ending September 30, 2021).
Snapdeal’s positioning is very clearly defined as a destination for good quality merchandise at value prices and its differentiated business model, with a full-stack value playbook, is well-positioned and well-timed to serve India’s value-savvy buyers across digital and physical channels.
Disclaimer: Snapdeal Limited is proposing, subject to receipt of requisite approvals, an initial public offering of its equity shares & has filed a draft red herring prospectus (DRHP) dated 20.12.2021 with the Securities and Exchange Board of India, which is available at SEBI, BSE and NSE and the websites of the BRLMs at AXIS CAPITAL, BoFA, CLSA and JMFinancial.
Any potential investor should note that investment in shares involves a high degree of risk. For details, potential investors should refer to the DRHP, including the “Risk Factors”.
This release is not for publication or distribution to persons in the United States, and is not an offer for sale within the United States of any equity shares or any other security of the Company.
Securities of the Company, including its equity shares, may not be offered or sold in the United States absent registration under US securities laws or unless exempt from registration under such laws.