As the festive season sales start winding down, the direction that Snapdeal has chosen for itself is becoming clear.
Traditionally during Diwali, eCommerce companies are able to sell more, but at the expense of larger losses and increased marketing spends.
Bucking the trend, Snapdeal has managed not only to increase sales, but has made positive net margin in the entire sales season. Snapdeal’s net margin for the current festive season grew six-fold compared to the festive season last year, converting a traditionally loss-making season to a profitable one. Net margin is the money that the platform makes as sales commission after deducting the costs of fulfilling the order, including logistics costs.
The ability to generate a positive return in times of hyper competition and aggressive discounting comes from a well-defined strategy that focuses on building depth in select categories and steadily increasing the efficiency of operations by optimizing all operational processes.
Signaling a sharp focus on the value segment, Snapdeal chose the festive season to curate the best deals on products that its core audience buys often, including merchandise like sarees, watches, footwear, kitchen tools and utensils, electronic accessories, personal care and value packs, among others.
The festive season also saw Snapdeal tie-up with virtually all leading banks, including HDFC Bank, Axis Bank, Citi Bank, American Express, HSBC, Standard Chartered Bank, Yes Bank, IndusInd Bank and Kotak Mahindra Bank to offer instant discounts ranging from 10-20%, which were in addition to the festive discounts.
In addition to the bank offers, Snapdeal also offered to its buyers a diverse set of benefits including free return tickets from Spice Jet, discounts on travel and hotel bookings from Yatra.com, discounts on movie bookings from BookMyShow and a free 3-months premium subscription from SonyLIV for every buyer on the platform.
Diwali 2017 is perhaps the first time that any e-commerce company of scale has reported profits. With Snapdeal declaring that it actually made profits on its sales this festive season, the myth of e-commerce being a choice between growth and profits is now being challenged.