After the failed merger with with India’s largest online retailer, Flipkart, Snapdeal is looking for a complete makeover. According to media reports,the Snapdeal founders, in a letter to employees wrote, “ We will be continuing the Snapdeal journey as an independent company.” The bosses of the e-commerce player envisaged a new strategy for the company, Snapdeal 2.0. In the same letter, they went on to describe, “ We firmly believe in our new direction – Snapdeal 2.0 – part of which is a laser focus on being a champion for all sellers in India, enabling anyone to setup a store online in a few minutes and focusing on providing large selection of products at great prices to consumers.”
The beleaguered company is likely to unveil Snapdeal 2.0 by mid-August. As per a CNBC TV18 report, the company is looking at a complete overhaul of its business model, through a four-pronged strategy. Firstly, Snapdeal will look to move out of non-profitable categories such as expensive mobile phones, branded merchandise, and high-end electronics. The report added that, this will allow the company to focus on high margin items such as unbranded merchandise.
Under the new strategy, the company may give up the current discount model, and charge sellers for inventory. Thirdly, the company may look to sell off the two subsidiaries, Vulcan Express and and Unicommerce. Earlier, Snapdeal had reportedly estimated a value of $150-200 million for subsidiaries Vulcan and Unicommerce, before the deal with Flipkart fell through. The fourth and the most difficult, would be cost reduction. The company has been in the news for laying off employees in the past. Snapdeal had reportedly laid off more than 7,500 employees in the year. Later on Monday, Zee Business had reported that Snapdeal has rubbished media reports of more than 80% layoffs under the new structure.
Tensions may be brewing for the company even before the new rejig, as the Japanese major Softbank is reportedly not convinced about the success of this new strategy. The company might be looking to exit its investments by following a piecemeal approach. In conclusion, the founders wrote, “Success is never final, failure is rarely fatal; it is the courage to continue that counts. Let’s work together to make Snapdeal 2.0 a super success!”.