In a move that mirrors that of its arch-rival and market leader Flipkart, CEO Kunal Bahl is stepping back from operational responsibilities to focus on fundraising and fund conserving, while his co-founder Rohit Bansal takes control of day-to-day activities. These changes are significant, especially with the drop in valuation as background. Snapdeal’s last confirmed valuation was at $4.8 billion last August, as reported by Mint, down from $6.5 billion in January. We also reported last week that VC firm Sequoia was apparently willing to sell its stake in Snapdeal at an even lower valuation of $3 billion.
Reorganising the workforce isn’t new for Snapdeal. It has tried everything in the book. Snapdeal has hired people, fired people; decided Gross Merchandise Value (GMV) was boss and then decided Daily Active Users (DAU) was the key metric. It focused on Exclusively.in to drive revenue and then wanted to acquire Jabong and is now hedging its bets on Freecharge. Snapdeal is doing everything that will return it to its glory days of nipping at Flipkart’s heels.
All of this would suggest, this is a farewell Snapdeal story. It is not. The company is evolving and is trying hard to stay relevant. Kunal Bahl and Rohit Bansal are not pushovers and they know how to put up a good fight. In June ‘16, Snapdeal had, according to sources, about $450 million sitting in the bank, giving it a runway of about 20 months. And buyers are circling. Snapdeal is the third biggest player in the market and you can swipe them away as an also-ran but do it at your own risk.
The evolution of Snapdeal will define how the market plays out. Not only for someone with skin in the game but also for a customer. Snapdeal has been wooing not just investors but buyers from across the world. Whispers of Bahl courting Alibaba to take a gamble and buy it out have been getting louder. This evolution, and our documentation of it, shows Bahl and Bansal’s well-intentioned but failed efforts to find a way out of the e-commerce maze. To piece this story together, The Ken spoke to several current and former Snapdeal executives. Most of them requested not to be named but had a lot to say in private.
Bridge over troubled water
Last year, in August, the top bosses at SoftBank and Snapdeal sat down to talk. The fight with Amazon was lost. They were asked to change track.
Snapdeal was reduced to being the third biggest e-commerce player. Orders peaked at 150,000 and then fell off a cliff, finally settling at 75,000-100,000. In context, currently, Amazon does 150,000 and Flipkart, just above 225,000 orders a day.
Last time Snapdeal knew it was losing a fight, it pivoted and that’s exactly what Bahl and Bansal tried to do. The first brainwave that came to the duo: build a version of WeChat in India. The five-year-old Tencent-backed company is the most popular chat platform in China. The company helps users chat, make e-commerce transactions and has a payment platform. It has 700 million active users, 200 million of them have linked their bank accounts to the instant messaging platform. A chat platform in August was commissioned to be tested on Freecharge and then expanded to Snapdeal.
Next, Bahl and Bansal started hiring. A big technology operation was commissioned. After a frantic round of hiring, Snapdeal stood at a bloated 8,000 people. Happy with the idea, in September, the duo went to the boardroom once again. And they were waiting for the question: What’s the plan?
Rise of the platform
“They said WeChat. And as soon as they said it, it was shot down,” says a former employee, who is part of another e-commerce major right now. He did not want to be named in the story as the current company does not allow him to talk to the media.
“There was no way Snapdeal could overhaul an e-commerce company around a chat platform this late in the game,” the person says.
It was September, and the two founders were back to the drawing board.
Then, another brainwave. Bansal in a brainstorming meeting suggested that users would take to Snapdeal if they were offered the e-commerce platform in their native language. So, the defibrillator was brought out for multilingual Snapdeal. In 2014, the company had launched Hindi and Tamil versions of the website but the idea was shelved.