Snap Deal Analysis

Topics: Marketing, Merchant, Discounts and allowances Pages: 7 (2573 words) Published: November 6, 2011
-- Launched in February 2010
“Our model is to go after unsold distress inventory”, Kunal Bahl, Founder & CEO "Our target audience is between 18 and 35 years who loved to spend on the nice to have things like a good restaurant dinner, a soothing spa, or a pair of luxury sunglasses. The distributors who are not able to sell directly sell at rock bottom prices through our medium" According to Bahl, India’s competitive nature and low barriers to entry for starting a new business leave only one place to stand out from the crowd: scale. So with a live site, Bahl and his developers began scaling immediately. Demand was high, but not in the way you might think. Rather than demand from the customer, it was from the businesses: The recession helped because businesses became desperate to move product. They were literally coming and saying “we’ll do anything.” has grown its 300-person staff to 500 and jumped from 1 million to 8 million members over a matter of six months With Snapdeal operations now extending across 50 of India’s largest cities and 10,000 brands and retailer partnering with the daily deal site, prospects are good. What’s more, according to Snapdeal Founder and CEO Kunal Bahl, the startup is currently averaging 1.5 million new members per month. Part of the reason the site has been able to scale so quickly, Bahl says, is that half of the deals currently featured on Snapdeal are inbound requests from merchants. This has significantly reduced sales cycles for Snapdeal, and with its new capital in tow, Snapdeal plans to continue expanding into hyperlocal markets across the subcontinent. Most of the daily deal and group buying sites in India are clones. Incidentally, many Indian portals try and replicate a successful and proven business model in the US. Sure, credit must be given that the Indian daily deal start-ups have kept many major players at bay and made them play second fiddle. But, the pace with which innovation is happening on the web is just stupefying. That applies in the Indian context as well. None of these companies are actually innovating on the business model (Groffr might be an exception). Adding more subscribers and new merchants alone won’t suffice to stay alive in this cut throat market. Complacency may not set in actively. But, lack of innovation will do exactly that. * What works?

1. Minimal terms and conditions
2. Clarity on conditions – clear communication – no last minute surprises 3. Discount hungry India/ Indians being given hefty numbers n discounts (50%-80%) 4. Industry CAGR 35% - CAGR 40%-50%

5. Online Retail pie worth $400 million and has 70% Mkt. Share (=$280 million in revenue) 6. Payment options aplenty, convenience to the customer.
7. “Inventory Liquidation”, “Customer Activation” and “Marketing Investment” are the three options provides to its merchants and they offer huge discounts on “off” days of business in order to bank on customer windfall and increase in volumes. (according to Sandeep Komaravelly, Head, Marketing, 8. Taken from

Arguments in Favour

1) Great Discounts: I don’t see this notion of getting such huge discounts on different services will go away so easily. Indian consumers love discounts and specially youngsters with their limited spending power now can afford & enjoy expensive services at cheap prices.

2) Inventory Management for Merchants: All merchants can manage their inventory by offering discounts & allowing customers at the time when there is minimal sale on their shops. Usually, merchants organise Happy Hours to clear their excessive inventory and now this is done through daily deal sites.

3) Guaranteed Traffic: By offering services like Spa, Health, Tattoo, Salons, etc. at huge discounts; merchants get guaranteed traffic on their stores. Most of these services are based on skills which require...
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