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Snapdeal expects to turn profitable in two years despite all odds

08-February-2017
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Snapdeal expects to turn profitable in two years despite all odds

In an unexpected move, online marketplace Snapdeal has reportedly suspended an incentive programme for customers that it previously employed through affiliates to conserve cash. This affiliate network comprises coupons, deal and cashback channels and blogs. Snapdeal pays commissions to affiliates based on the number of people who end up doing transactions on the marketplace.

Generally large online marketplaces reportedly allocate around 20 per cent of marketing budget. Snapdeal, according to media reports, spent Rs 4-5 crore on its affiliate channels around Diwali out of an estimated Rs 200 crore marketing budget (it had announced a while ago).

Snapdeal terms this suspension as part of a modification process. “The Snapdeal affiliate program is being recast to make it more effective and to drive higher RoI on the same. We have advised our affiliates about the same and the new plans will be shared over the next few days, after incorporating feedback received from the partners. We utilise multiple concurrent channels for customer acquisition and deeper consumer engagement and we constantly evaluate new / additional options,” says the spokesperson of Snapdeal which has also been losing ground to rivals over the past months.

 

In the midst of all this, the Jasper Infotech-owned online ecommerce major saw two exits of long-time employees, Abhishek Kumar, head of M&A and investments, and Sandeep Komaravelly, SVP of Shopo, a C2C marketplace. Komaravelly , one of the oldest employees joined after his startup Grabon was acquired by the ecommerce player in 2010, while Kumar played a key role in multiple acquisitions for Snapdeal and quit after a three-year stint. The spokesperson confirms, “Additionally, after more than six years of rich and productive association with Snapdeal, Sandeep Komaravelly has, in Jan 17, moved on to pursue other opportunities in the entrepreneurial space.  Abhishek Kumar has decided to take forward his entrepreneurial interest, which takes him outside Snapdeal. The process of transition is underway.”

Other senior executives who have left Snapdeal in the past year include Anand Chandrasekaran, chief product officer, who quit in May last year to join Facebook.

Also, Snapdeal recently reported a loss of Rs2,960 crore ($441 million) in the financial year to 31 March 2016, according to regulatory filings.

Despite all the obstacles on its way, its founder Kunal Bahl is confident about Snapdeal turning profitable in two years as it renews a drive to boost efficiencies and enhance consumer experiences, according to reports. In an interview to Reuters, he had forecasted that Indian e-commerce will grow to $350 billion in a decade as online shopping gets easier and more people use high-speed Internet connections on their phones. He has also mentioned that Snapdeal’s EBITDA (earnings before interest, taxes, depreciation and amortization) has improved by almost 40 percent and its commission has grown by 3.5 times. Bahl has also pointed that currently Snapdeal has enough capital.

Snapdeal has, till now, raised about $1.76 billion in 12 rounds of funding. The most recent one came in August 2016 from Luxembourg-based firm Clouse SA that ploughed in $21 million. It was valued at $6.5 billion after a fund-raising last year.

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