Snapdeal, an e-commerce platform in India, went from being extremely popular to the number two firm in the country in just six years. At its peak, Snapdeal was valued at an amazing $6.5 billion, thanks to investors like Ratan Tata and huge organisations like SoftBank, eBay, and Nexus Venture Participants. Yet, Snapdeal's fortunes started to fall precipitously in 2016, as the company's market share dropped from 25% to 4%. The company was about to go bankrupt in 2017. After receiving such a large sum of money, why did Snapdeal eventually collapse? What caused vendors to cease supporting it? Given Snapdeal's current state, is it reasonable to anticipate the company to regain its previous grandeur in the near future?

Snapdeal: A Memoir of Triumph and Tragedy

Snapdeal, founded in 2010 by Rohit Bansal and Kunal Bahl, saw strong competition in the Indian market from established players like Flipkart. Flipkart now controls half of the market, while Snapdeal is clinging to a meagre 4%. In its early stages, Snapdeal displayed a great deal of potential. It attracted a large number of sellers, amassed a substantial customer base, and raised large sums of money from prominent investors. The short yet successful run of Snapdeal began at this point. Nevertheless, its demise was caused by a multitude of causes, including dissatisfied merchants, inadequate customer service, and internal mismanagement.

Problems with Customer Service

A key component in Snapdeal's downfall was the dissatisfaction of its customers. Customer service, incorrect products, and late deliveries were some of the most common concerns regarding the platform. For example, one Chennai customer paid Rs. 12,000 for a phone but got half-eaten bread; another got a trimmer instead of a torch; and yet another got a phone but got half-eaten bread.

These incidents were not isolated; several customers had comparable problems, including obtaining fake products, dealing with delivery delays, or even being refused refunds completely.

The Original Origins

  • Lax Management Practices: Since Snapdeal did not have a strong system in place to check and verify shipments, dishonest sellers could easily take advantage of the platform.

Because of these problems, consumers stopped trusting the site and began buying on more reliable platforms, such as Amazon and Flipkart.

Challenges Faced by Sellers

Snapdeal lost the trust of an increasing number of vendors and purchasers. Due to the high volume of orders and the laxity of the company's standards, merchants first discovered the platform to be profitable. But when Snapdeal's higher-ups started imposing strict rules, it caused:

  • Seller Account Suspension: Account suspensions occurred due to minor offences.
  • Restrictive Requirements: Sellers are now subject to more stringent regulations.

Divisive Programmes

Forcing vendors to transfer their stock to Snapdeal's facilities was a contentious policy. Particularly for big vendors with their own warehouses, this method posed considerable logistical difficulties. Snapdeal drastically cut into these vendors' sales when they refused to comply and were restricted to shipping only five products daily from their warehouses.

Other Elements That Contribute

The demise of Snapdeal was hastened by a number of additional factors:

  • Not Inventing Enough: Snapdeal couldn't differentiate itself from competitors like Amazon and Flipkart. Snapdeal prioritised sales over user experience and customer loyalty, in contrast to Flipkart's fashion and electronics focus and Amazon's wide selection, which includes Prime Pantry.
  • Bad Investment Decisions: Snapdeal utilised investor money to aggressively purchase numerous companies, ignoring internal objections. It invested around $6 million over six years on top of what it spent on fourteen acquisitions. Freecharge, Unicommerce, GrabOn, and ReduceData were among several that tried and failed.
  • Problems with Leadership: Snapdeal's leadership also contributed to the company's downfall. There was a lot of employee and seller dissatisfaction and turnover since a small group of people at the top made all the important decisions with little input from senior management.

Despite its financial woes, Snapdeal persisted in spending lavishly on things like advertising during sales events like Diwali, establishing needless warehouses, and employing pricey staff from IIMs and IITs. The senior executives were handsomely compensated, with each receiving over ₹45 crore.

Nikesh Arora was a key role in SoftBank, and his exit signalled the end of substantial support. Snapdeal was unable to cover even its most basic running costs after Arora left because of the dramatic decline in investment.

Is It Possible for Snapdeal to Come Back?

The future of Snapdeal is unclear, however the following tactics could help the company regain market share:

  • Priorities should centre on the customer, and they should include making sure that returns and refunds are easy to follow and that deliveries are made on schedule.
  • Operational Efficiency: Cutting expenses requires a streamlined approach to operations. Among these, you can find:
    • A well-oiled supply chain and logistical system.
    • getting rid of money that isn't needed.
  • Making financial investments in order to improve the user interface.
  • Establishing a Specialty: Snapdeal would be better served by catering to the needs of a smaller, more targeted market than by going head-to-head with industry heavyweights like Amazon and Flipkart. To stand out from the competition, try narrowing your focus to a certain product category or region.
  • Making an Investment in Technology: If you want to be successful with online sales, you must make an investment in technology. If Snapdeal wants to make buying on its platform more convenient for its users, it should improve the platform's security, features, and interface.

In summary

Many lessons may be derived from Snapdeal's journey for e-commerce businesses. It highlights the significance of future planning, operational optimisation, and customer experience prioritisation. Snapdeal has an unclear future, but it has the potential to carve out a position in the competitive Indian e-commerce sector by learning from its mistakes and making the required improvements.

Ending Remarks

As Snapdeal's story demonstrates, the e-commerce industry is complicated and full of challenges. It stresses the significance of businesses being adaptable, customer-centric, and creative. Even though Snapdeal's future is cloudy, other companies in the same industry can benefit from the lessons learnt from its failures.

Where do you stand on this issue? Is there any hope for Snapdeal to get back on its feet and take control of the market? Post your thoughts in the comment section!

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Discover more from Debasish Sinha | Author | Entrepreneur

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