Snapdeal turns its business around, posts 73% revenue rise

E-commerce marketplace Snapdeal’s 2.0 strategy has helped script its turnaround in FY19.

Per regulatory documents filed by the company, its consolidated revenues grew to 925.3 crore in FY19, against 535.9 crore in the previous fiscal, marking an increase of nearly 73 per cent. It also managed to reduce its losses by a significant 71 per cent to 186 crore in FY19 from 611 crore reported in FY18.

Cash break-even

In its filings, the company said: “This year we continued our focus on driving growth with a lean and capital-efficient foundation in the business. Our operating revenue increased 87 per cent on a YoY basis with a significant reduction of the cost base.

“The company achieved a significant milestone by achieving cash break-even in the month of June 2018 and also made the highest ever net revenue in its history in the month of October 2018.”

These results are in line with Snapdeal’s 2.0 strategy, which it articulated in 2017. Snapdeal had said it aspired to be an “open marketplace” which would onboard a large number of sellers very quickly at minimum cost/effort, maximise the operating efficiency of the marketplace by adopting a lean operations model and pursue growth “based on healthy unit economics”.

Bucking the trend

“Our transacting customers grew 2.2X and traffic surged 2.3X to 70 million unique users per month. And all this in a year when e-commerce companies in India burnt through $2.5 billion in the pursuit of growth,” Kunal Bahl, Snapdeal’s co-founder and CEO, said in a blog posted on his LinkedIn account.

Pointing out the neutral nature of Snapdeal’s marketplace, Bahl said: “The doubling of our orders in the last one year is actually a two-fold increase in the business of the seller partners on our platform, the majority of whom are small businesses. Each and every order that is fulfilled on Snapdeal is by independent, third-party seller partners.”

With ShopClues out of the scene and Paytm’s marketplace strategy not having worked out as expected, Snapdeal is definitely in the third place in the e-commerce sector after Flipkart and Amazon, observed Anil Kumar, founder CEO of RedSeer Consulting.

However, Snapdeal is still a very distant third.

In order to be a big player and scale up, it will have to raise funds by attracting the right investors into its fold, he said.

In the last two years, Snapdeal has sharpened its focus on the needs of the value-conscious buyers in India. As a consequence, more than 80 per cent of its users come from small towns and cities. This market of nearly 400 million potential buyers is the fastest growing segment in Indian e-commerce.

New seller partners

In the last two years, Snapdeal has added 60,000 plus new seller partners, who have added over 50 million new listings. It now has more than 500,000 registered sellers, who have more than 200 million listings on the marketplace.