INDIA: value-conscious buyers from India’s smaller cities and towns will propel the growth of Indian e-commerce. According to a RedSeer market study commissioned by Snapdeal, the number of buyers from India’s 2+ cities and towns, covering more than 80% of India’s population, will triple in size in five years, from approx 78 Mn in 2021 to nearly 256 Mn by 2026.
Snapdeal, one of India’s largest pure-play value eCommerce platforms in terms of revenue for FY 2020, is leveraging this growth in the ‘Bharat Shoppers’ base by executing a focused strategy that aims to serve the value-conscious buyers.
According to RedSeer, the overall online shopper base in India is projected to reach 350 million by FY 2026, compared to 140-160 million in FY 2021. However, while the ‘mature’ segment of the overall shopper base is nearing saturation and the ‘emerging’ shopper segment will drive growth.
These shoppers are from the mid-income segment and a majority of them reside in the Tier 2+ cities of India. These shoppers are value-conscious given their affordability needs and mainly started making purchases online post the launch of Jio in 2016 which led to a decline in the cost of data and smartphones
.Snapdeal targets value-seeking, mid-income, price-conscious buyers and receives more than 86% of its orders from outside metro cities, with more than 72% of its orders coming from buyers living in Tier 2+ cities & towns (on the count of units of shipped orders during the six months ending September 30, 2021), each with a population of less than 1 million. In line with this, more than 95% of the products sold on Snapdeal are priced below Rs 1000 and more than 77% of Snapdeal’s business comes from repeat customers. Snapdeal’s asset-light logistics networks, powered by 3PLs, cover 96.65% of India’s pin codes. It served buyers from more than 2,500 cities during the six months ending September 30, 2021.
With over 200 million app installations on Google Play Store, Snapdeal is one of the top-four online lifestyle shopping destinations in terms of total app installations in India as of August 31, 2021.
Snapdeal uses artificial intelligence, machine-learning algorithms, and other data science tools to analyze large volumes of data and offer a personalized and discovery-led shopping experience that is designed to help users find products that may interest them. During the six months ended September 30, 2021, more than 60% of the orders placed on the platform were made through discovery and without using a search term. More than 99% of orders on Snapdeal are placed through mobile phones (as per 6 months ended Sep 30, 2021), with more than 73% of its orders received via its app (as per 3 months ended Sep 30 2021).
Snapdeal’s delivered units have grown 86.3% over the last two quarters, while its Net Merchandise Value grew by 82.48% in the same period from Q4 FY 21 to Q2 FY 22. Due to its focus on higher-margin categories and due to its low cost of fulfillment, Snapdeal has been consistently making positive contribution margins per delivered unit for the past 3 ½ years.
The company intends to continue growing its business, further expand its user base, upgrade its technology structure and continue the execution of its growth strategy including building out its portfolio of “Power Brands”, expanding logistics capabilities, and starting partner-led Omnichannel distribution. For this, it plans to raise Rs. 1,250 crore through fresh issue of equity shares and offer for sale by selling shareholders up to 30,769,600 equity shares (an Initial Public Offering). Of the total fresh issue, amount of Rs. 900 crore will be utilized towards funding organic growth initiatives.
SoftBank, Blackrock, Temasek, eBay, Intel Capital, Nexus Venture Partners, Tybourne, RNT Associates, Premji Invest, Sequoia Capital are some of the key shareholders of the company. Out of the company’s total 71 shareholders, only 8 shareholders have offered to sell a small portion of their respective shareholdings, collectively amounting to less than 8% of the company’s pre-offer equity share capital as part of the IPO. The company’s founders, Kunal Bahl & Rohit Kumar Bansal, who collectively own 20.28% of the company’s shareholding will not be selling any of their holding in the IPO.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Copyright © 2014 - 2022 The Global Indian New Network (TGINN)