Snapdeal, started with an initial seed capital of less than $ 1 mn and till now it has gone for two rounds of funding. The series A funding happened in January 2011 with an investment of $12 mn by Nexus and IndoUS. The second round of funding happened in August 2011 with a series B funding of $40 mn from Bessemer Venture partners, as well as contributions from existing investors Nexus venture and IndoUS Venture partners5. To see the tangible Series B funding from existing investors immediately after the closing of its series A funding is somewhat unusual.
But lots of e commerce sites are attracting huge money recently. Kunal who is the CEO, had to say that they struggled at every turn of business in initial year but later it grabbed the eyeballs of consumers with its whopping discount prices coupons on diverse deal categories. The company plans to use the funding for further expansion to 100 cities, upgrade the portal and put in place a better database management system. Some inorganic opportunities are also on cards. In June 2011, the promoter group company Gasper InfoTech brought out Grabbon.
With the funding in place, we are all set to see some consolidation in future with bigger players eventually buying out smaller firms. Being a start up, the most important element of building a successful firm was to find the right people for the right kind of role. It was not easy but having a good assessment process did help to the cause. The company is streamlined into various departments who handle specific roles. This include Business Development, Logistics, Inventory sourcing, Content, Production, Technology, Online & Offline Marketing, HR, Accounts and Customer support teams among others.
The company was building an e commerce platform but they did not have good technological talent at the beginning. Prospective employees didn't turn up for interviews. They started operations from a residential area, which made it extremely difficult to hire people. However, company has weathered many of such challenges now by having a good assessment process in place and hiring talented bright professionals. As of August 2011, the company had headcount of 500 professionals6 which is expected to reach 800 by year end. The next big challenge for the company is how to manage the growth so fast.
Scaling large geographic region and control on the ground is no easy feat. For this reason, the company devotes considerable time to the education and training of its staff in the hope that they are building not only viral company, but a business that has long-term viability and one in which a staff member is encouraged. Being an internet based e-commerce co, it is important for Snapdeal to appear on the first page when someone runs a search on google or any other search engine for that matter otherwise competitors will take the business away.
So, Snapdeal adopted search engine optimization, popularly known as SEO. It is a process by which you add keywords and checks site for any duplication of keywords etc. This improves the quality of web page and thus enabling your web page to appear first whenever a search is done. Another major breakthrough achieved by the IT team was in web designing. The whole website is attractively designed yet simple in operation and navigation. Separate small windows are created for each deal with colourful tabs and unified themes.
All older deals are posted in the right hand side bar and the latest deals are kept at the centre of the web page area. Each deal is backed by deal highlight, location, reviews, and a menu card. For each deal, a punch line is created which is essentially a summarized detail of the deal. All of this contributed to make the site user friendly. This year the company is expected to close with 100cr turnover. Recent investments by venture capitalists suggest that the company is being valued at 1000cr. Less than 20 months old; Snapdeal is on its way to register a record in the history of Indian e-commerce business.
It is all set for an exponential growth given its grand platform and strong foundation. But the roadblocks in the path of success are not less. The most challenging aspect of running an online deal site is to be able to build an element of trust with the end customer and establish a long term relationship. Till now company has easily managed 20% margins on each deal but with the advent of dozens of new players the competition has got intense. It would be interesting to see how company manages competition and at the same time maintains the quality of deals on offer going forward.