When an entire Indian village gets renamed after your website (and yes folks, this did in fact happen), it can only mean great things. And great things are indeed happening with Kunal Bahl’s SnapDeal.com. Since Bahl and his co-founder Rohit Bansal started SnapDeal in 2007, it has since evolved from a regular daily deal site to being India’s largest online marketplace – one that mirrors global giant eBay. With 20 million users and $400 million in expected revenue this year, SnapDeal’s future is bright. This week, eBay made that future even brighter by leading a $50M funding round in SnapDeal – a move that gives eBay instant entry into the skyrocketing Indian e-commerce market. A day after the good news hit the media, we sat down with Kunal to learn more.
Wharton Journal: What an amazing week for you, Kunal. Congratulations on the funding round! Before anything else, tell us more about SnapDeal. How did you guys get started?
Kunal Bahl: Rohit Bansal and I started Snapdeal.com in Feb 2010. We were high school friends and had always wanted to start something of our own. We were not sure of what to do – but we knew that we would one day. After high school, he went to IIT and I went to Wharton. We were working in decent companies (Rohit at Capital One and I was working with Microsoft) when one day we start talking about how we were bored with our regular routine jobs. It was then that we decided that now was the time to do something, to start a company of our own. Retail industry in India was growing and E-commerce was still at a nascent stage of growth. We realized that digital commerce had tremendous potential and would be the next big thing in India ($30 bn market in the next 5 years). We decided to start something in this space.
When we started Snapdeal.com, we had no clue on how to run an internet company but over a period of time we have learnt and have built a very strong team – we have over 1,000 people in the company now, all of them come from leading schools in India and are subject matter experts in their respective fields. Today, when I look back, I can proudly say that we have built India’s largest marketplace with over 5000 brands and a million unique products listed on our site. However, there is still a lot of work to do, we are going to become bigger, much bigger in the coming few years. We are expecting our assortment size to increase to 25,000 brands and 20 million products in the next two years.
WJ: A lot of people question the future of daily deals and call it a fading business model. Everyone’s talking about the so-called daily deal fatigue. Yet, the leading daily deal operators in emerging markets (India not excluded) have opened doors for other e-commerce companies as they educated consumers about the online shopping concept. And it looks like they’re here to stay. What’s your take on this?
KB: We believe there is room for various internet business models in every market, as different customer propositions will resonate with different types of customers. Our focus is to continue building a great experience for all the buyers and sellers on Snapdeal’s platform by offering them a wide range of high quality products and services with super fast shipping.
WJ: Many leading daily deal operators have followed in the footsteps of Groupon by getting into new verticals like products, and are now evolving into full-fledged online marketplaces ala-Amazon. SnapDeal is one of the very few that have done this early, and exceptionally well at that. How was that process of moving away from the pure daily deal model for you?
KB: Snapdeal.com was started as a local merchants marketplace. We realized soon enough that to build a really large company, we had to command a much larger share of the consumers’ wallet. In order to do so, we decided to move in a more logical direction and extend our platform to merchants selling products as well. We made this decision a year and half ago and since then, we have been continuously expanding the product portfolio and currently have over a million products on the site, which is the largest assortment of products available in one destination across online and offline channels in India. We are adding a new product every 30 seconds and we have over 5,000 brands on Snapdeal. The business has undergone a significant shift in the last year or so. Earlier, 95 per cent of our business came from local merchant services, but it accounts for less than 5% now, the rest being products.
Change is inevitable in business and occasionally requires some amount of creative destruction of previously built systems and processes to make way for the newer requirements of consumers and partners. This also means having to make certain hard choices. From an organizational perspective, there should also be a readiness to accept the importance of everyone but not the indispensability of anyone, no matter their seniority. This is an incredibly important ingredient in the culture of a fast paced company.
We were at the outset expecting some tough organizational challenges as people might think that we had a different vision when we started and were now doing something completely. Nevertheless, luck favoured us. What worked was that these shifts were communicated well internally but not as jarring “changes” but as a process of “natural evolution” that the company was undergoing.
WJ: Global giants like eBay and Amazon have long wanted – and attempted – to break into the Indian e-commerce market, but have so far produced less-than-stellar results. What were the things you did right with SnapDeal that made you succeed when cash-rich industry leaders failed?
KB: ‘Adaptability to change’ is probably the most important factor behind our success. Most well established companies foray into Indian markets with a set framework but fail as the industry itself is still at a nascent stage of growth and thus highly unpredictable. Companies need to understand that they need agile thinking as well as customized systems and processes to do well in a market like India. Above all, knowing the consumer and his/her needs is of paramount importance to get anywhere.
WJ: What’s next for SnapDeal post-funding? How do you see the business evolving in the next 24 months?
KB: Snapdeal is already India’s largest marketplace. We are going to become much, much bigger in the next 24 months. We are expecting to cross $400 mn in sales in the coming year with our assortment size increasing to over 25,000 brands and 20 million products. Further, in next 12-18 months, we are expecting 30% of Snapdeal’s sales to be via mobile devices. This is a big focus area for our company. We expect our sales over the mobile to cross PC sales in the next 3 years. Philosophically we are super committed to solving the problem of facilitating commerce by enabling hundreds of thousands of SMEs and brands in India to directly connect to the hundreds of millions of consumers across the country. This is our mission.
WJ: As an alum, would you have any advice to share with Whartonites who are looking to build the next big web success while on campus?
KB: The advice is usually very basic and rudimentary, because so much is dependent on circumstances. Solve a real problem for a very large group of people. Build a great engineering team as early as you can. Invest in your culture. Most importantly, be positive, always.