Snapdeal Eyes 'Value' Lifestyle Segment Growth in E-commerce

New Delhi, Nov 5 (PTI) Snapdeal believes the e-commerce story over the next 5-10 years will be around the growth of the 'value' lifestyle segment, and the online marketplace is looking to corner a "decent slice of this opportunity" as it focuses on unit economics, quality checks, and use of AI as well as tech to measure and improve customer experience.

Snapdeal's business metrics are "in a good space" in the value e-commerce category and it has opted to "reinvest in growth now" as financial parameters are within striking distance of profitability, Himanshu Chakrawarti, CEO of Snapdeal, told PTI.

In an interview, Chakrawarti said that Snapdeal expects a "normal" festive season, which typically yields a 25-30 per cent surge in demand over other months.

"As per estimates the value (lifestyle retail) market in India is growing significantly, from USD 88 billion to USD 175 billion. Also along with this, the e-commerce portion is going to increase from 8 per cent to 22 per cent...we are largely focused on our journey because this opportunity size is huge," Chakrawarti said.

The e-commerce story over the next 5-10 years will play around the 'value' segment, and Snapdeal is eyeing a "decent" slice of the market opportunity, he said.

"We are not saying we'll carve 60-70 per cent of this market. We are saying we want a decent slice of this opportunity that is coming up, and that we feel can be done if we focus our energy entirely on our unit economics, which is what we do, and the customer proposition," he said.

Founded by Kunal Bahl and Rohit Bansal in 2010, Snapdeal saw a storied rise commanding a valuation of an estimated USD 6.5 billion at its peak, but later battled survival issues alongside a failed merger with Flipkart. It also faced market share erosion amid stiff competition.

Snapdeal resurrected itself with the '2.0' version, scripting a turnaround strategy with an aim to focus on affordable lifestyle products for budget-conscious buyers in tier-II towns - the value segment, and tighter checks on quality measures.

"Now for the consumer of Bharat, who are not necessarily completely native with the digital medium, for them to come onto the platform and try to figure out through ratings and reviews and detailing, the quality part is a bit tough. So we are putting in all guardrails in place whereby the product offering or the range on our platform is of a certain quality," he said.

Snapdeal, he said, has crafted the consumer experience for the cohort of 'value lifestyle' customers, who have entered the online shopping space over the last 4-6 years. At present, men's wear, women's ethnic wear, footwear, and home categories are popular, accounting for a big chunk of Snapdeal's revenue.

"Further, most of these customers are fairly new to e-commerce transactions. Now, our platform is built in a manner where we help and guide them...All the steps are quite easy to understand...The text is large and limited, there is a high focus on visuals, and support comes in at every stage through voice and vernacular," he said.

According to Chakrawarti, the platform has leveraged Artificial Intelligence (AI) and Machine Learning (ML) tools, and data science capabilities to maximise customer experience.

"We focused a lot on the customer experience, measuring it at various touchpoints. We have made massive progress...Escalation matrix are very clearly defined and they trigger in automatically...we are using tech, data and data sciences to make the customer experience easier," he said.

The e-commerce company, which caters to 97 per cent of pin codes, is keen to expand the depth of its offering in markets, including southern India, and widen regional focus, going forward.

The "stringent quality measures" are aimed at ringfencing customers and creating transparent mechanisms, according to Snapdeal.

"We have travelled a long way on this path," Chakrawarti said, adding that while new sellers have come in, those not complying with quality parameters have moved out of the platform, keeping the number of sellers by and large the same over the last 2-3 years.

Since Snapdeal has exited certain categories, the customer numbers and traffic are lower, but the platform is seeing 75 per cent of business from repeat customers, demonstrating buyer stickiness.

On whether competition with deep pockets puts Snapdeal at a certain disadvantage, he said, "No, because the market is large and so there will be people looking for honest, good pricing with good control on quality. They will discover and keep coming back to us".

On the FY24 expectation, Chakrawarti declined to talk about growth targets, but said Snapdeal is "travelling quite well along the growth path".

"...we are not looking at doubling, tripling of our topline every year. Our growth is essentially coming in on the Snapdeal platform which has been a good robust mechanism this year. But also along with that we have opened up our 'house of brands' which is again providing us overall growth as a business," he said, adding that both the verticals "are shaping up quite well".

The past six months have been "quite good" and Snapdeal is now looking forward to the festive season which is "important".

"Where we have reached over the last 3-4 months is...we are now along the 'black' line (profitability)...We are virtually there. But we are now putting our energies into fuelling growth. So we have the option of actually taking into it, into proper 'black' or actually reinvesting to start growing again in a big way, and we have decided to re-invest this on growth both for Snapdeal and for Stellaro Brands," he said.