“Happiness is not in money, but in shopping,” Marilyn Monroe once said. Monroe’s words seem to have foreseen the future as nowadays, shopping is considered to be a therapy, on account of the Internet and e-commerce platforms. India’s e-commerce market is believed to be one of the fastest-growing e-commerce markets in the world. Additionally, the Indian e-commerce market was valued at $46.2 billion in 2020 and is expected to reach the $136.47 billion mark by 2026, on the back of 18.29% growth rate, as per a report by the International Trade Administration, a United States Department of Commerce-based agency. In the age of digital transactions, where a single tap can unlock a world of shopping convenience, traditional retail finds itself reshaped by the rhythm of online commerce. One such e-commerce platform, which has been a player in the Indian market for over 10 years, is Snapdeal. The company’s net loss narrowed 44% to Rs 282.2 crore in FY23 from Rs 510 in FY22, as per regulatory filings. Moreover, the company’s total income declined 33% to Rs 388.1 crore in FY23 from Rs 563.5 crore, during the same period in the preceding fiscal. In an interview with BrandWagon Online, Himanshu Chakrawarti, CEO, Snapdeal Marketplace, talks about the fall in the company’s consolidated operating revenue, besides its growth strategy and plans. (Edited Excerpts)
How was FY23 for Snapdeal? How did you cope with the consolidated operating revenue drop, as it declined by 33% to Rs 388.1 crore in FY23? What are your plans to make up from the drop?
Our primary focus has been on two things. One is to create a relevant platform for the value lifestyle customers in India and secondly, it is to bring our company to break-even profitability. So, one is from the customer angle and the other is from the business angle. In the process, we reached around the break-even levels.
Essentially, we want to grow with the pace of the market. The value lifestyle market is growing at around 25-30% year-over-year (YoY), and we are aiming for it. Our primary plan is to grow this year and to appeal to value lifestyle destinations.
Competitors such as Amazon and Flipkart are ahead of Snapdeal, how do you see this? What are the strategies which Snapdeal follows?
We are aiming to cater to the semi-urban cohort. I believe that customers trying to find a Kurti or a T-shirt in the price range of Rs 300-450 is considered tough, which is where we intend to fill the gap. I think you will virtually find very few brands in the mass segment or the value segment as we call it. Therefore, it is dominated either by local shops in the local markets where the quality is considered erratic or you have got sellers on platforms who come in with mixed qualities.
We conduct quality checks on the seller or merchandise on our platform, as we do not have mass sellers for every category. There is strict quality benchmarking and curation, which is done apart from the price range.
Our showcasing of products is based on images being larger, and the language being simpler with most of it being in colloquial language. Therefore, it becomes easy for these segments to understand, select, and choose. The platform is experienced in a ‘quick buy process,’ where the prominence lies in the buying button for customers.
Additionally, we don’t charge anything for deliveries. So, the price which you see either on your Instagram or Facebook feed is the final price.
Is it tier-1 cities over tier-2 and tier-3 cities, or the vice-versa? Which market works the best for you and why?
Approximately, 80-85% of our customer base are from smaller towns when it comes to geography.
Since 80-85% of your customers are from tier-2, tier-3 cities or smaller towns, what is your proposition for the metro cities and tier-1 cities? What are the plans ahead?
We have around 73-74% of customers from tier-2 cities and beyond. We have roughly 13-14% of our customers from the metro towns, with tier-1 cities contributing to another 13-14% towards our customer base.
I think there are enough opportunities available in the metro cities, out of which we intend to select a couple to grow our business in these areas. Firstly, we are redesigning our iOS application which is more catered to our metro audiences. Secondly, we are trying to do a brand infusion as this can get us higher traction in metro cities than in smaller towns. For this, we have included brands such as Baggit, and Daniel Klein, among others, in the value plus segment. We have also onboarded an athleisure brand, called Technosport.
What kind of brands have you boarded on the platform? How many more are you aiming to acquire by FY25?
We have a large number of labels on the platform, along with some big brands such as Jockey, and Zivame’s Rosaline to name a few, but we have put them in the value segment. We have added brands such as Varanga for kurtis, Ramraj Cotton for lungies, Clovia for lingerie, and Red Tape and Bata for footwear. In the apparel category, we have added Janasya, and Aurelia, among others. We have added approximately 1,200 brands in the value-plus segment in the last three months.
We are planning to add another 500-1000 brands by this quarter, and with that, we intend to cover all the value brands which are available in the environment.
What is your customer repeat rate and cost of customer acquisition?
I believe we have a high repeat rate, which constitutes almost 75% of our business.
How do you see the change in online shopping behaviour when compared to the pre-COVID era? How did it impact the e-commerce business?
If we look at the lifestyle segment, which is where we operate, roughly 75% are mom-and-pop stores or traditional retailers while 17% are under the branded category or modern-format stores, which includes retail chains such as Max, and Zudio, among others. Only eight percent of the market is online, which is a smaller market.
In the online space, mainly the premium segment, people have been shopping online for years. However, there is also a large segment of people who have not experienced e-commerce or have hardly experienced it. These are the people who we expect to come in the next three to four years in large numbers to shop online. Therefore, the value of the segment for online shopping should grow significantly.
Post-COVID, the retail segment, meaning malls, started to open which started to have an impact on the premium end of the market.
How do you see young shoppers, mainly people from the Gen-Z category? What are the factors involved in their purchasing decisions? How is it different from millennials?
For Gen-Zs, I think one shouldn’t restrict them to a single pattern because of their varied nature. They are digitally native and can understand not just e-commerce, but everything from gaming to social media. Therefore, they adopt the digital medium as their primary medium, in terms of the way they shop, despite being price sensitive similar to other age cohorts.