Snapdeal’s 40lakhs/hr loss scheme

Contributed by Lord Gyan Guru

The front-runners of the Indian Start-up industry are faltering. Flipkart has gone through several rounds of devaluation, Zomato also faced a similar issue, and some dot coms have even pulled down shutters. The others who have escaped this fate are pushing through thanks to a good marketing pitch and some fudged numbers on Microsoft Excel. Several astronomical numbers have been revised and seen a drop in an attempt to bring about a correction in this valuations game.

In fact, the Indian e-commerce war is almost over, with Amazon emerging as the clear champion bringing with it prior experience in this field and a proven track record in the west, deeper pockets and a better brand perception. Surprisingly, one company still thinks it can outdo the best in the market with almost no presence – Snapdeal. It was once considered a contender for the top spot in the Indian e-commerce industry when it was just marginally behind Flipkart and neck-to-neck with Amazon. However, it fell by the wayside as the market matured, and then came Amazon’s 2 billion investments, which swept over the entire industry.

Thanks to this in 2016 alone Snapdeal’s losses amounted to nearly 3,300 crores, which translates to 38.4 lakhs per hour.

So where exactly did all this money go?

For starters, Snapdeal tried hard with a great rebranding campaign – it revamped its website and logo, bought air-time for ads on prime time radio, and even invested in a Shankar Mahadevan jingle. But it wasn’t enough to move customers whose brand loyalty mainly remained rooted in Amazon.

According to company filings, a large portion of their losses were due to increase in overhead expenses and fulfillment, in an attempt to deliver world class customer service and set up the right infrastructure for growth. “In FY2016 we invested our capital in building our capabilities across technology, logistics and seller ecosystem to support the long term growth of our business,” said a company spokesperson.

And then there are rumors of a potential sale to Alibaba. It amazes me when a company stronghold over an entire nation’s (China) online sales would want to enter the Indian market with a brand that could not take off. I mean, Aliexpress or Alibaba  can do much better with its own brand image than taking over a brand playing with fudged valuations.

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