What went wrong with Snapdeal?
4th Feb 2018 19:14 HarshitTweet
“When you are doomed to failure, your conscience dies first”
Once a milestone in the journey to success, Snapdeal has now lost its own way. So, unless you have been imitating kumbhkaran for past few months or have time travelled to the stone ages, you already know that the swadeshi startup, Snapdeal, whose acquisition by Flipkart fell apart. After facing 2017 filled with ups and downs, the company is rolling out a slew of pre-festive sales to try and gain back lost market share. Also, they are looking to trim non-core services like logistics arm - Vulcan Express in a bid to survive in the super competitive world of e-commerce.
But don’t you want to know where did Snapdeal got off track and the reasons behind the derailing of the Snapdeal Express? So, read out to unveil the mystery.
Source: Financial Express
1. Innovation? Neh!, we’ll just copy it
The major problem with the Indian startups is that they just copy the already existing business model in that regime and paste it in India without molding it according to the Indian market. Now, if it were China, then this copy paste mechanism would have smoothly worked out, since there is no competition from the outsider companies; but in India, these startups face cut-throat competition from the non-Indian rivals, and hence succumb to failure.
“Snapdeal was not doing anything ground-breaking. Online retail, after all, is also just retail. Your competitors are as good as or better than you. If you don’t have a striking difference, why should a consumer choose you over others? Snapdeal failed to stand out—they had the upper hand in no particular category or service,” says an e-commerce expert.
2. Worthless Acquisitions
Snapdeal acquired many companies to boost up its evaluation, but all went in vain. Some of them though, worked well, but Snapdeal failed to capitalize them in the long term.
While making acquisitions, Snapdeal seemed to have forgotten the golden rule of investments-“Invest not in peak, but in the valley.” All the acquisitions that Snapdeal made were when the companies were on their peak, unlike Flipkart who acquired companies like Jabong and Myntra from their deathbed and gained an upper hand in fashion.
Snapdeal’s earlier acquisition of Exclusively.com, for luxury fashion, bombed in less than a year and was shut down a few months ago.
3. Late entry into E-Wallet usage
Snapdeal’s acquisition of FreeCharge also failed to make waves for the company, as Paytm continued to be the leader in digital payments and FreeCharge failed to capitalize on demonetization the way Paytm did, FreeCharge is now rumoured to be close to acquisition by Paytm.
4. Uncontrolled Expenditure
“Branding at the cost of business does more damage to the brand”
The brand in its ‘exorbitant’ rebranding exercise burnt INR 200-crore hole in its pocket. At a time when the brand was already draining, it tried to look profligate by spending an insane amount of money.
During diwali the dil ki deal offer, Snapdeal offered so many discounts which in return could not extract as many profits from the market as the company expected.
5. The Amir Khan and the Snapchat controversy
When CEO of Snapchat Evan Spiegel, was criticized for labelling India as a poor country and that Snapchat is not for such countries, the patriotic fire in the Indian population was instigated and amidst the heat of the matter, Snapdeal was confused with Snapchat and people boycotted their swadeshi company.
Moreover, when the country was having a debate on intolerance, Amir khan came up with a controversial statement while he was the brand ambassador for Snapdeal’s diwali offer. Due to which Snapdeal had to face the wrath of the people, which in turn, affected its brand value.
6. Departure of senior level Executives
There have been several top-level exits in 2016. In January, Senior Vice-president of marketing Srinivas Murthy resigned. In May, Snapdeal lost its prized Silicon Valley hire Anand Chandrasekaran, who was the brand’s Chief Product Officer. In June, the Business Head for electronics, Saif Iqbal, left.
In November 2016, Vijay Ghadge, Chief Operating Officer at Snapdeal’s in-house logistics arm Vulcan Express Pvt Ltd, had quit barely four months after joining the firm. Future Group is in discussions to buy Vulcan Express from Snapdeal for about ₹50 crore, now.
The management-level exit was of Sandeep Komaravelly in January 2017. He was Senior Vice-president in charge of Snapdeal’s zero commission marketplace ‘Shopo’. Snapdeal’s Head of Corporate Development Abhishek Kumar had resigned in Feb 2017. Tony Navin, Head of Partnerships and Strategic Investments, decided to quit after 7 years time.
Source: Economic Times
Snapdeal’s struggles over the past few months are additionally due departure of a string of senior-level executives.
7. Kill sellers, kill marketplace
Sellers run e-commerce marketplace. No sellers means, no sales. This is where Snapdeal went wrong according to one of the sellers on Snapdeal.
According to him, in the beginning, the topnotch leadership of Snapdeal was quite warm welcoming for the sellers and sellers found it as the best platform to sell their goods at. They made large profits and minted money, but as the business grew, the rights of sellers were compromised with and there was no one to give heed to their problems. Also, at that time amazon appeared much more promising to the sellers, giving rise to the shift towards it.
End of the Story
It is said that when the going gets tough, the tough get going. But this Unicorn has lost its zest, and cannot charge forward anymore—too many initiatives and not following through have resulted in its downfall. Despite some interesting innovations and services, Snapdeal was not able to create an offering the customer could not live without.
For the growth of any industry, a majority of players have to die down–just like the theory of ‘Survival of the Fittest’. But the positive momentum that comes with this wave can create more players, bring in more money, and give way to more innovation.