Snapdeal’s Journey from Deal-a-day Site to
India’s Largest Online Marketplace
E-commerce, in the popular sense, can be defined as: the use of the Internet and the Web to conduct business transactions. A more technical definition would be: e-commerce involves digitally enabled commercial transactions between and among organizations and individuals. Ecommerce differs from e-business in that no commercial transaction, an exchange of value across organizational or individual boundaries, takes place in e-business. E-business is the digital enablement of transactions and processes within a firm and therefore does not include any exchange in value. E-commerce and e-business intersect at the business firm boundary at the point where internal business systems link up with suppliers. For instance, e-business turns into e-commerce when an exchange of value occurs across firm boundaries.
Snapdeal is an ecommerce company headquartered in New Delhi, India. This online retail firm was founded by Karun Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi, in February 2010. Their website Snapdeal.com features a wide range of products and services from thousands of national, international and regional brands with a wide assortment of products across categories like mobiles, electronics, fashion accessories, apparel and footwear, kids, home and kitchen, sports, books, restaurants, entertainment and spas amongst others. Snapdeal has become a shopping destination for millions of online users across the country. Snapdeal enables small and medium sized retailers to cost effectively acquire hundreds of customers by offering discount deals at their establishments through its online e-commerce platform. This leads to cost savings on the marketing side and leads to more brand awareness.
Snapdeal was started in February 2010 by Karun Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi. Snapdeal.com started as a daily deal platform. It was essentially a Group buying or crowd bargaining site which offered deals and discounts on restaurants, spas, car wash, etc. Snapdeal charged a marketing fee from the retailer for every deal sold on the portal. Bargain Website Model
The services are usually for registered customers, who are informed of the deals through emails and text messages every day. The system works like this. A local store, a fashion chain or a restaurant approaches the bargain website with its best deals, and the bargain website in turn offers or sometimes auctions them to its members for a nominal amount to be paid upfront through a debit or a credit card. Customers get their coupons either through email or in the form of a text message or both. The retailers pay a stipulated amount — or a commission — for every redeemed coupon to the website.
Group buying sites benefit from a relatively simple minimum number of buyers. The limited time period creates a sense of urgency, prompting impulse purchases. All interested buyers must provide their credit card information, but are only charged if the deal goes live. Little money is locked up in working capital because the group buying website either bills the entire amount of the purchase upfront and retains a commission before passing the rest of the payment onto the merchant, or charges a token amount and directs the user to pay the rest at the merchant's site. If the deal does not materialize, the group buying site isn't stuck with any back inventory because the discounted service or item is sourced at the participating business. Buyers receive vouchers for their purchases via e-mail or text message and they have anywhere from one to three months to redeem the offer.
Snapdeal’s idea was to give consumers a better price through deals if they purchase in greater numbers; and that was the basic premise of group buying websites that had emerged in India and in other parts of the world. According to Bahl,...
References: 1. July 10, 2010 : ‘Click More, Save More’, Hindustan Times
2. August 15, 2010 : ‘Net Gain’, Telegraph
3. September 2010 : ‘Snapdeal now achieves another milestone’, Moneymint.in
4. September 9, 2010 :‘Group Buying Sites: Strategy of the Future or Too Good to Be True?’, India Knowledge @ Wharton
5. November 26, 2010 : ’Netting Deals’, The Telegraph
6. February 1, 2011 : ‘E-tailing Wars - The race to the top of Online Shopping Industry is wide open’, Businessworld
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