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Today, when consumers think deals, they think SnapDeal!

Kunal Bahl, co-founder and CEO of SnapDeal.com is considered
to be the poster boy of daily deals ecommerce business in India. In an
exclusive interview with AlooTechie, Kunal Bahl shares his story about the
journey of SnapDeal, its way forward and the present scenario of ecommerce
market in India.

When SnapDeal started,
what were your prime focus areas?

Kunal Bahl, co-founder and CEO of SnapDeal.com is considered
to be the poster boy of daily deals ecommerce business in India. In an
exclusive interview with AlooTechie, Kunal Bahl shares his story about the
journey of SnapDeal, its way forward and the present scenario of ecommerce
market in India.

When SnapDeal started,
what were your prime focus areas?

We are about 15 months old now and the business continues to
grow at around 50 to 60 per cent month on month. And most of that happened
as we were focused on getting or doing three things very correctly. Our prime
focus was to create an excellent customer experience on the website. Secondly,
when we started out, people said that daily deals model has low barriers to
entry. But soon after we started out, we realised that the biggest barrier in
this business is to build your brand. Presently we have reached a point where
in India, whenever a consumer thinks deals, they think SnapDeal and achieving
this was not easy. Our vision for SnapDeal is that it needs to be participating
in consumer’s lives – everyday. Customers write in to us to say that when they
get to office in the morning, before they check Facebook, they check SnapDeal.
To us, even if there are 50 people out there who are doing this right now, we
know that if we maintain the trajectory of our progress and customer
centricity, we will have 5 million people doing that eventually every day.

Creating the right customer experience and choosing the
right mix of media to promote the brand proved effective for us and this gave
us a lot of credibility as a company. The third was selecting the team. Today
we have 400 people in the company and on-ground, we have people across 50
cities in India. And all our operations, including our call centre, are
in-house. We are in such a growth trajectory that we want to closely monitor every
process of the company.

Speaking about
branding, people say that an online service should be focused on online brand
building as its consumers are on this medium. But SnapDeal has done a lot of
activities on TV. Your reasons for this?

We were the first non-travel ecommerce company in India to
do TV advertising. Many of our well wishers told us not to do TV, but we
planned the media very effectively. We had a partnership with MTV Roadies where
SnapDeal was featured in one of the episodes. The day that episode was aired,
we got two million visitors on the site and 150,000 new subscribers. Right now
we are adding 1.5 million subscribers per month and by the end of the year, we
will be having 1.5 crore subscribers.

It is not that branding doesn’t work on internet. Performance
advertising does work well and this also contributes to your brand being built.
If someone has visited your registrations page, they have seen your brand. So on
internet, branding is a by-product of online ads. However, Indian consumers
have this peculiar way of thinking that companies which do above the line (ATL)
advertisements are “genuine”. That might not remain the same five years from
now, but presently this is the case. And I can also tell you that five years
down the line, internet will be an expensive medium to advertise on. Till now,
a fan on Facebook costs Rs 2 to Rs 4, whereas in US, they cost  upwards of a dollar. Even our TV ads fetched
us good numbers and this is because when awareness meets availability, consumers
act.

As an entrepreneur,
what have been your learnings while running SnapDeal?

Whatever we are doing right today, will help us six months
down the line. The fun part about about this journey is that, whatever a mature internet company learnt in 10 years, we have had to learn many of those
things in one year. And that was possible because of the right team. When I and
Rohit (Bansal) started SnapDeal, we didn’t even know how to run a Google Adwords
Campaign and now we are probably one of the more sophisticated advertisers on
Google in India. And again the team is responsible for this. One of our
investors called us a ‘brutally aggressive’ company with one of the best teams
in the internet ecosystem in India.

We are quite happy that now the space is validated due
to the traction that SnapDeal has seen, the ecosystem is growing and as a
result foreign players and large Indian internet companies are now entering the
space as well – a step we welcome as it will only contribute to faster growth
of the space that we lead.

What was the idea
behind SnapDeal? How has been the experience so far?

Last year, about a year and a half of our starting the
offline couponing business, a couple of small retailers came to us and said
that why don’t you start the service on internet? Now it struck us that when a
small merchant is saying that internet is working for him as a means of customer
acquisition, this must be a watershed moment in the evolution of local
advertising and ecommerce in India. At that time, content companies sold
impressions on the internet through banner ads and typically fleeced smaller
advertisers into paying them CPM rates with no conversions to offline sales. So
those small merchants told us that if we did something on internet, they were
ready to do it with us, and then there was no looking back for us.

But we didn’t know anything about the internet and we spent
a lot of time understanding the medium. We also invested a lot of effort in
selecting and registering the domain name. Initially we didn’t even have the
dot com (.com) domain and when SnapDeal launched, it was SnapDeal.in. We bought
the dot com (.com) three months later for $3000 and we thought that was a lot
of money. Our website at that time was really shabby, but over a period of time
we improved and built an excellent technology team who in turn re-built the
entire platform. It would be fair to say that SnapDeal as a technology platform
is one of the most robust sites in India that support over 1.2 million visitors
every day and still loads in less than one second.

We gradually saw our traffic growing and around September
2010, and we decided to take the brand to the next level and hence we planned to go
on TV. We planned our media in such a manner that we were actually able to
track our ROI and this resulted in us getting a disproportionate ROI from the campaign. So for us doing TV was a net
positive investment.

Even today most of my time goes in thinking what would be
our next step forward. We are not focused in building just a group buying company;
rather our aim is to form a platform that provides great experiences to
customers all across India through curated inventory of products, services and
travel at unbeatable prices.

Speaking about the
overall ecommerce market in India, right now we are seeing a lot verticalisation
taking place. Do you think verticalisation is the way to go for Indian
ecommerce players?

I don’t think so, because in India, everyone will try to do
everything and try to become an Amazon. So presently the market is divided,
from an ecommerce format standpoint, into catalogue e-retailers and people like
us, who feature limited, deal oriented, inventory. In our view when multiple
companies sell the same stuff at the same time, while there is differentiation
on service quality, eventually there is margin erosion. Hence, we like our
strategy of value based pricing of unique inventory across categories as it
helps to sustain significantly higher margins – we pick what we want to sell
given we are an impulse based commerce platform.

What has been your
observation about the Indian consumer’s online buying habits?

The consumer behaviour has definitely changed and there are
a lot of reasons. Internet allows you to do so many things that the interest
and confidence of the consumers to buy online has increased. That’s probably
the reason why India is the fastest growing market for Facebook. So there is significantly
increased propensity among consumers to buy things online and that propensity
is different among consumers in Tier I and Tier II cities. For Tier I
consumers, ecommerce means convenience because cities are large and there is
too much traffic and too little time. In smaller cities, ecommerce enables access
to aspiration. For instance, today if we are selling Reebok sunglasses, we are
providing people in Guntur an access to these products and also at a deep discount.

There has been
consistent feedback from consumers that after buying a deal on a daily deal
website, when they land up to the merchant, proper attention is not being paid.
What are your thoughts on this?

I don’t disagree to that and unfortunately, the customer
centricity values of most smaller merchants in India are very different from
our customer centricity values and we can’t change that right away. So how do
you bridge the gap? One way to bridge the gap can be ensuring through training
and education that the merchants and their staff treat the consumers well. Finally
if there is an issue with the customer, then there should be a ‘no questions
asked’ money back guarantee. In case there is a merchant who is a repeat
offender, for whatever reason, we make sure that the merchant is blacklisted.
So in our case, such things happen with less than five per cent of the deals we
sell and this is because of the checks that we perform time and again with
solid backend processes.

We are also very
mindful that the merchants need to make money, even after giving out an
attractive discount. At the time of signing a deal, the merchant is sometimes
desperate to get customers, even to such extent that we sometimes get merchants
who are ready to offer free service to our customers. But we never encourage
such deals with merchants because we know that for this to be a sustainable
partnership, everyone needs to make money.

But unfortunately some of our peers in the industry don’t
set such standards for their customers and that at times creates an issue for
us. But, as the industry matures and rationalizes, better sense will prevail
and we will have high quality operators in the market. We know that our company
is not just obsesses, but animalistic about customer delight. We also know we
are not always perfect or on time and do fall short of the aggressive expectations
we set – but, we are willing to listen to our customers and do something about
it. For instance, every first Saturday of the month, I send out an email to all
our customers from my personal ID and whenever a reply comes, I reply back to
them within 48 hours. This month I replied to 3000 customer emails. Getting
your ass kicked by a customer, even over email, is a very humbling experience
and makes you want to try harder. We do this because want to make sure our
customers don’t see SnapDeal as a vacuous, intangible service, but one which
has real people listening to them.

Even on the products side of the business, we are super
careful about the products that we sell. For instance, many ecommerce sites in
India are trying to build up topline by selling grey market Blackberrys and
iPhones which are imports from other parts of the world. We stay away from such
practises because these products are of suspect quality and carry no
manufacturer warranty. SnapDeal will never sell a product that we would not
recommend our own families to buy from us. Having a long term view on the business and the
brand has been key to our selectiveness of the products and merchants we
feature on SnapDeal.

What’s next from SnapDeal?

We are currently competing with ourselves – the question of
how to grow faster is the one that keeps us up at night. Although when we
started the business, there was a lot of competition, however through our
team’s efforts on multiple fronts we broke away from the pack some time back,
and now are at the forefront of traction and innovation in this industry. There
are a lot of players in this segment but one needs tremendous staying power to
sustain. Organisationally, we have a great DNA when it comes to sales and that
is super critical in this business. People have tried many kinds of strategies
to hire our people at three times the salary or even blank cheques, but we have
barely lost any of our team. Everyone in our company knows that success comes
as a team and not individually and each and every individual is super aligned
towards the goal of building SnapDeal into the #1 internet brand in India.  

In the next couple of quarters we will become a strong
player in the products space also. We started product deals a couple of month
back and the day we started, our vendors (who also supply to all ecommerce
companies in India) told us that they have never seen such volumes from an
ecommerce company in such short periods of time. And the beauty is that we are
not even doing COD (cash on delivery) yet, which accounts for up to 80 per cent
sales for many Indian ecommerce companies. We are targeting to cross Rs 100
crore of revenue this fiscal and a lot of this will come from deals, with
products and travel being a part of it.

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