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Home / News / Business News / Snapdeal makes strategic shift with wholesale entity
  • Business

    Snapdeal makes strategic shift with wholesale entity

    Supriya
    Written by
    Supriya
    Mail
    Last updated on Sep 20, 2016, 08:25 am
    Snapdeal makes strategic shift with wholesale entity
  • With a significant shift in strategy, Snapdeal is moving away from the marketplace model by setting-up a wholesale unit.

    Snapdeal's business model is now likely to resemble that of its competitors, Flipkart and Amazon.

    The wholesale entity will buy products upfront as opposed to the current framework of a marketplace where Snapdeal merely plays the role of an intermediary between sellers and buyers.

  • In this article
    Snapdeal vs. Flipkart and Amazon Snapdeal's founder on FDI rules for "inventory model" Why the strategy pivot? Snapdeal: IT Company NOT E-commerce company Survival of the fittest
  • Business Models

    Snapdeal vs. Flipkart and Amazon

    Snapdeal vs. Flipkart and Amazon
    Credits:
  • Snapdeal's founder Kunal Bahl, a long time proponent of the marketplace model has often touted its feasibility and has been critical of Flipkart's inventory model in the past.

    The latest strategic move is towards a model already adopted by Snapdeal's competitors.

    Amazon and Flipkart's closely associated wholesale entities, Cloudtail and WS Retail, respectively play a significant role in selling products on e-commerce platforms.

  • Quote

    Snapdeal's founder on FDI rules for "inventory model"

  • In March 2016, when new FDI rules disallowed investment in the "inventory model" impacting Flipkart and Amazon, Kunal Bahl said, "Always a great feeling when you stick to the course that you believe in, pays off: Focusing on a pure marketplace and not doing inventory."

  • Possible Reasons

    Why the strategy pivot?

    Why the strategy pivot?
    Credits:
  • Departure from the marketplace model allows Snapdeal to have better control over its inventory and service quality levels.

    The new wholesale corporate entity will predominantly focus on bringing fashion brands on board that tend to prefer selling directly to e-commerce entities.

    Fashion constitutes 25-30 % of Snapdeal's business.

    The wholesale venture is also expected to fund vendors according to sources in the know.

  • Quote

    Snapdeal: IT Company NOT E-commerce company

  • Last year, during the course of an interview, Kunal Bahl refused to categorize Snapdeal as an e-commerce company and said, "We are an IT company and we are a software company. We are not an e-commerce company. We are an enabler."

  • Steps taken

    Survival of the fittest

    Survival of the fittest
    Credits:
  • Snapdeal reported a loss of Rs.1300 crore for 2014-15.

    Amazon dislodged Flipkart for July and August; Snapdeal slipped to number 3 and is trying to regain market share by ensuring impressive gross-sales for the upcoming festive season.

    Earlier in September, Snapdeal overhauled its branding with a new logo, TV campaign, launch of 'Snapdeal Gold' and has committed Rs.200 crore for advertising and marketing.

  • Snapdeal
  • Kunal Bahl
  •  
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