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Snapdeal's Differentiated, Full-Stack Value Commerce PlaybookSnapdeal’s sharp positioning that combines “only good quality” with “always affordable prices” is driving its differentiated value commerce business model; a USD 175Bn opportunity | ||
New Delhi, Delhi, India With the rapid rise of smartphones and easy access to the internet, India is witnessing a second e-commerce boom, which comes from ‘value lifestyle’ buyers. These are shoppers who are on a budget and aspire to own quality products that may not be accessible to them in the markets of their smaller hometown stores.
New to the internet, they are exploring e-commerce websites to buy trendy, fashionable goods of great quality within their means. The growing number of such value-conscious online shoppers from India’s smaller cities and towns is reshaping India’s e-commerce landscape.
The growth of online shopping is due to consumer preference for larger assortments (than what is available in their physical proximity), attractive pricing, seamless “no questions asked” return policies and cash on delivery options. The convenience of availing services at their own time and place, the availability of product videos and vernacular descriptions are some of the other factors contributing towards the expected fast growth of value e-commerce.
Snapdeal focuses sharply on a select range of products with affordable prices, good quality and high-touch customer experience
According to RedSeer’s market study commissioned by Snapdeal in August 2021, the total addressable market for value lifestyle retail is expected to reach USD 175 billion by FY 2026, growing at an approximate CAGR of 15%. Today, 75% of the value market is served by unorganized, physical retail channels, while the balance 25% is served by organized brick and mortar and value e-commerce channels. By FY 2026, the share of value e-commerce alone will rise to 22% and is estimated to grow faster in the Tier 2+ cities.
Leveraging this enormous opportunity, value-focused platform, Snapdeal’s business model comprises a full-stack value playbook that is helping it serve this underserved and fast-growing mega cohort of value-conscious consumers. It has chosen to focus sharply on a select range of products with affordable prices, good quality and high-touch customer experience.
Components of Snapdeal’s full-stack value playbook:
Snapdeal also guides its sellers to consistently list new and trendy products, which enables the platform to showcase fresh selection to users when they visit Snapdeal. Snapdeal’s sellers also typically offer low pricing throughout the year and hence users can get best prices at all times, without having to wait for seasonal markdowns
Smart positioning and execution More than 95% of the products sold on Snapdeal are priced below Rs. 1,000 with over 77% of its business coming from repeat customers. It has more than 40 million monthly active users - a monthly average for the six months ended September 30, 2021 - and has had over 550 million page views every month between April 1 to September 30, 2021.
Snapdeal’s delivered units have grown 86.3% over the last two quarters from 4.61 million in Q4 FY 21 to 8.59 million in Q2 FY 22 (based on the count of units of shipped orders during the six months ending September 30, 2021).
Snapdeal’s positioning is very clearly defined as a destination for good quality merchandise at value prices and its differentiated business model, with a full-stack value playbook, is well-positioned and well-timed to serve India’s value-savvy buyers across digital and physical channels.
Disclaimer: Snapdeal Limited is proposing, subject to receipt of requisite approvals, an initial public offering of its equity shares & has filed a draft red herring prospectus (DRHP) dated 20.12.2021 with the Securities and Exchange Board of India, which is available at SEBI, BSE and NSE and the websites of the BRLMs at AXIS CAPITAL, BoFA, CLSA and JMFinancial. Any potential investor should note that investment in shares involves a high degree of risk. For details, potential investors should refer to the DRHP, including the "Risk Factors". This release is not for publication or distribution to persons in the United States, and is not an offer for sale within the United States of any equity shares or any other security of the Company. Securities of the Company, including its equity shares, may not be offered or sold in the United States absent registration under US securities laws or unless exempt from registration under such laws. |
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