Match Maker
The
CEO and Co-founder of Snapdeal on the making of India’s largest online
marketplace
When
Kunal Bahl uses terms like joota ghisoing, it just doesn’t fit into the regular
narrative of a high-profile dot com CEO. But that’s exactly what Bahl (who the
site describes as Mastermind) and his friend Rohit Bansal (Brainbox) did before
their offline discount coupons business morphed into Snapdeal. The net avatar,
started at the dawn of the current decade, has evolved into India’s largest
online marketplace with more than 4 million products. All that joota ghisoing
by Bahl and Bansal has now translated into a yearly growth in excess of 500% per
cent. In conversation with CD, Bahl talks about the need for speed, learning
from Chinese e-ventures and how the philosophy of business translates on
ground. Edited excerpts:
Experiment till market reveals the way
On Jan 25th 2010, a couple of merchants called us saying, “You know, online is taking off”. On Jan 26th, we could not open the office, so we sat in Costa Coffee, and for eight hours brainstormed on how to launch the site because we had no experience with ecommerce. The only thing that we knew was how to register a domain name. But eight days later, we launched Snapdeal. Our goal was to start doing 100 transactions a day in three months. We started doing 100 transactions within three weeks.
Speed, Speed, Speed
When we launched, we were the seventh player in India. Within six months, there were 50 players in that space. So it became hyper-competitive very quickly, but within 14 months of launch, we had 70% market share. We had met so many merchants in our offline coupons avatar, nobody in the market knew how to do that better than us. That was our competitive advantage. We could get higher quality merchants and so we had more traffic from consumers. As we got more traffic, we got more merchants.
Listen & test loop
Mid-2011, something interesting started happening. Consumers started reaching out to us saying that they wanted to buy products from us, which was bizarre because we had only sold services till then. Merchants started reaching out to us saying they wanted to sell physical products on our site. We said, let’s follow natural supply-natural demand and test it out. The first product we put up on the site was a watch and we sold a thousand pieces.
Contextualise learnings and bet big
The third milestone was when we went to China in 2011. We came back and told our team we have to scale down deals. Even though we had won 70% market share in a business that was so competitive and had a bunch of money, we wanted to scale down. When we went to China, it became clear that if we are going to build a $50-100 billion dollar company, it can be done in products, not services. In India, you do not have so many merchants in services, so you would never have enough transactions that are loss free.
Do business with Bharat, not only India
In 2012, we laid the foundation of a market place. All the e-commerce companies in India were focused on building an inventory-led business, but we weren’t. Our advisors thought we had gone crazy. Our rationale was that the only way to build a large classical business is to solve a real problem. A large chunk of middle India has aspiration and money, but no access. The real need on the supply side is for small businesses to be able to procure locally but sell nationally. In India, these small businesses have led a life of such acute suffering, now someone is going to them and saying you have a good product, good price and good service, we will make you rich. That is our clean proposition to a small business.
Innovate at points of maximum impact
We specifically created Safeship, a reverse auction marketplace for courier companies. All our sellers have to use Safeship to ship products. If the product comes in the seller’s panel, the courier companies get allocated dynamically at an order level based on historical quality of service and cost. Over a period of time, courier companies automatically improve their service and reduce their prices because if they do not, they will stop getting packages. We have become the largest e-commerce client of all the courier companies in India. Our goal was to control the intelligent part of the supply chain using technology or physical infrastructure as required.
Be careful with advice, even the VCs
You need clear and transparent communication with your investors and board members, but you also need to have conviction in your strategy. Your strategy cannot be an amalgamation of theirs – it has to be your strategy. You can take inputs but you have to more often than not, ignore 70%. The problem is, you don’t know which 70%.
Mobile first is the way to go
Mobile is going to be a big chunk of e-commerce. If you had told me one year earlier that 30% will be mobile, I would have said you are joking. I would have said it will be 10% max. We created a separate product and engineering team saying your focus is to compete with Snapdeal’s PC business. The only one we can compete against is actually ourselves.
b y Vinod Mahanta CDET 140314
Experiment till market reveals the way
On Jan 25th 2010, a couple of merchants called us saying, “You know, online is taking off”. On Jan 26th, we could not open the office, so we sat in Costa Coffee, and for eight hours brainstormed on how to launch the site because we had no experience with ecommerce. The only thing that we knew was how to register a domain name. But eight days later, we launched Snapdeal. Our goal was to start doing 100 transactions a day in three months. We started doing 100 transactions within three weeks.
Speed, Speed, Speed
When we launched, we were the seventh player in India. Within six months, there were 50 players in that space. So it became hyper-competitive very quickly, but within 14 months of launch, we had 70% market share. We had met so many merchants in our offline coupons avatar, nobody in the market knew how to do that better than us. That was our competitive advantage. We could get higher quality merchants and so we had more traffic from consumers. As we got more traffic, we got more merchants.
Listen & test loop
Mid-2011, something interesting started happening. Consumers started reaching out to us saying that they wanted to buy products from us, which was bizarre because we had only sold services till then. Merchants started reaching out to us saying they wanted to sell physical products on our site. We said, let’s follow natural supply-natural demand and test it out. The first product we put up on the site was a watch and we sold a thousand pieces.
Contextualise learnings and bet big
The third milestone was when we went to China in 2011. We came back and told our team we have to scale down deals. Even though we had won 70% market share in a business that was so competitive and had a bunch of money, we wanted to scale down. When we went to China, it became clear that if we are going to build a $50-100 billion dollar company, it can be done in products, not services. In India, you do not have so many merchants in services, so you would never have enough transactions that are loss free.
Do business with Bharat, not only India
In 2012, we laid the foundation of a market place. All the e-commerce companies in India were focused on building an inventory-led business, but we weren’t. Our advisors thought we had gone crazy. Our rationale was that the only way to build a large classical business is to solve a real problem. A large chunk of middle India has aspiration and money, but no access. The real need on the supply side is for small businesses to be able to procure locally but sell nationally. In India, these small businesses have led a life of such acute suffering, now someone is going to them and saying you have a good product, good price and good service, we will make you rich. That is our clean proposition to a small business.
Innovate at points of maximum impact
We specifically created Safeship, a reverse auction marketplace for courier companies. All our sellers have to use Safeship to ship products. If the product comes in the seller’s panel, the courier companies get allocated dynamically at an order level based on historical quality of service and cost. Over a period of time, courier companies automatically improve their service and reduce their prices because if they do not, they will stop getting packages. We have become the largest e-commerce client of all the courier companies in India. Our goal was to control the intelligent part of the supply chain using technology or physical infrastructure as required.
Be careful with advice, even the VCs
You need clear and transparent communication with your investors and board members, but you also need to have conviction in your strategy. Your strategy cannot be an amalgamation of theirs – it has to be your strategy. You can take inputs but you have to more often than not, ignore 70%. The problem is, you don’t know which 70%.
Mobile first is the way to go
Mobile is going to be a big chunk of e-commerce. If you had told me one year earlier that 30% will be mobile, I would have said you are joking. I would have said it will be 10% max. We created a separate product and engineering team saying your focus is to compete with Snapdeal’s PC business. The only one we can compete against is actually ourselves.
b y Vinod Mahanta CDET 140314
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