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How Snapdeal is leading India’s value e-commerce journey


For centuries, shoppers in India have resorted to bazaars to meet their needs. Right from Delhi’s Karol Bagh to Mumbai’s Fashion Street, bazaars feature several merchants offering similar wares side-by-side.

In these settings, the shopper can browse the offering of multiple merchants. This gives them the opportunity to purchase products of satisfactory quality at prices that strike just the right cord with both parties.

In the late 1990s, as the country’s economy opened up, disposable incomes began to grow and the gates opened up to internationally-renowned brands, which also bolstered the value of homegrown ones. Brand-conscious consumerism was a possibility for upper-class and some middle-class consumers that could afford it.

Fast forward to today, it was the branded products that brought about the e-commerce boom to India, given that its quality could be vouched for. The online nature of the marketplace meant that merchants or platforms could offer tempting discounts, and consumers could now browse through a significantly larger catalogue, bringing a whole new dimension of growth to the country’s retail sector.

The many layers to India’s retail sector

Given the frequent discounts on e-commerce platforms and the staggering level of sales seen thereafter, it is easy to assume that most Indians are brand conscious consumers that extensively leverage discounts to shop from their favourite brands.

However, the truth is that India’s retail consumers are far more segmented than the English-speaking, urban consumers that largely made up the number of e-commerce consumers in India in the initial years. According to data from multiple sources, as of 2020, there are 290 million households, of which approximately 13 percent earn a monthly income of Rs 1.25 lakh and above. It is these households who can afford to buy high-end, branded and even luxury products on a consistent basis.

Close to 60 percent of India’s households continue to meet their consumer needs through the brick-and-mortar bazaars. These can be categorised as: ‘The Next Billion households’, amounting to 103 million, with monthly incomes ranging between Rs 20,000 – Rs 50,000; and ‘Aspirers’, totaling to 66 million households with monthly income ranging from Rs 50,000 to Rs 1.2 lakh. These households might be aware of brands, but mostly do not have the disposable income to buy them, even at a discount.

Members of households aspire to lead better lifestyles than the previous generation, but have relatively modest incomes at their disposal. They prize quality at affordable prices over brand association. Non-branded, affordable electronic goods such as mixer grinders that work for years, even decades, come to mind as prominent examples.

Value e-commerce: India’s largest growth opportunity

Many retailers have seen the opportunity with this particular segment of consumers, and developed large chains of brick-and-mortar stores to cater to value-savvy buyers in a modern retail environment. However, the growth prospects of such a model are capped by limitations of location, the reach of stores, the expenses associated with them and product discovery limited by floor space.

As internet penetration continues to grow with increasing rates of smartphone adoption, e-commerce has a massive opportunity to gain significant market share of India’s retail sector, currently around $900 billion in market size.

The way forward? Value e-commerce – an e-commerce business model that focuses on good quality products at low prices. The starting point for value e-commerce is a “value-for-money” price-quality equation and not a brand name. While brand-based consumerism begins with a brand followed by the best discount, value e-commerce is more discovery-led, as purchases are made on the basis of quality, price, varied tastes etc.

Value e-commerce serves all users who are looking to get more value for their online spends and are not necessarily looking to buy leading brands at a discount.

A lot of the options in value e-commerce comprise relatively small, regional brands and also unbranded merchandise. Because these products are not promoted by spending a lot of money on advertising and brand promotion, their prices reflect costs and not brand premiums. This translates into products that match the quality of branded products, but at prices closer to that found in the bazaars.

Data suggests that the market for unbranded and value goods is $210 billion and $70 billion respectively, significantly higher than that of branded products. This makes it one of the largest opportunities of the retail sector.

Decoding Snapdeal’s value e-commerce playbook

As more and more buyers and sellers are understanding the reach and convenience of the digital marketplace over the years, Snapdeal has built a leadership position in India’s value e-commerce segment. It has rolled out multiple initiatives that make it easy and engaging for buyers to discover value-priced merchandise, and for sellers to tap this mega opportunity. Some of its key initiatives include:

Building a sharply focused value e-commerce marketplace: Over the last one year, Snapdeal systematically worked with the sellers on its platform to improve the quality of their products’ on the basis feedback from customers. Working through this over time, it progressively raised the bar on quality rating for products. It has also identified and on-boarded new sellers who offer a better price-quality proposition that are aligned with consumer expectations.

The marketplace also facilitates the Manufacturers to Consumers (M2C) form of selling. Right from home goods manufacturers of Salem, Ambala and Jagadhri to the makers of bed linens from Panipat and Jaipur, consumers now can access the value goods directly from these manufacturers, thus receiving more choices and at better prices. The selling prospects of these manufacturers are also no more constrained by their geographical location.

Empowering sellers to leverage Snapdeal’s platform: With the help of Analytics, Snapdeal helped sellers improve the quality of the products by analysing the features customers are looking for – like coin pockets in wallets, extra stitching on masks or higher thread count on bedsheets. This has helped sellers add and highlight features that customers value.

Its ‘Jaldi Payments’ service enables sellers to receive payment within three days of delivery of a shipment. Snapdeal also revised its standard operating procedures to ensure manual on-boarding for seller to reduce any friction around the process. Snapdeal also carried out consumer surveys gaps and identified gaps in the marketplace. These were then filled by actively scouting for sellers that could meet their requirements, and assisting them to on-board themselves on the platform.

A customer-centric approach through data: By leveraging technology, Snapdeal has worked towards creating a highly personalised, engaging and fun shopping experience, similar to how India shops offline in the bazaars of India. A key aspect of the bazaar model is product discovery. Snapdeal’s discovery-led platform consists of endless personalised product feeds that are customised to the unique needs of every consumer.

The recommendations on these feeds are based on advanced data science and Artificial Intelligence (AI). Thus, no two feeds would ever be the same and cater to the unique tastes of each consumer. Another aspect driving personalisation is the ability to access the platform in a variety of vernacular languages.

A robust logistics network: Snapdeal’s logistics and delivery network is integrated with the platform’s tech backbone to drive efficiency. It operates in a decentralised manner with centralised IT so that sellers can make direct shipments. Its network of third-party delivery and transportation providers provides a flexible logistics footprint that focuses on ensuring on-time deliveries, even to the remotest parts of the country.

Lean operations: Snapdeal uses a lot of data science for optimisation of service and costs. Having lean operations ensures that fixed operating costs are very low. Thus, the platform serves over 5 percent of India’s connected population with just 650-700 people in the company, generating over $100 million of net revenue.

Comprehensive focus on value: Unlike other platforms that have a small value selection as part of a larger offering, Snapdeal is 100 percent focused on value. This focus has enabled Snapdeal to build an assortment that is deep and broad enough to cater to the entire gamut of value needs.




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