Online marketplace Snapdeal aims to spend an additional Rs 660 crore ($ 100 million) to strengthen its supply chain and logistics operations, as it prepares to battle for greater market share in the upcoming festive season.
The move comes at a time when the New Delhi-headquartered company is aiming for the top slot in India’s fiercely contested online retail industry where, apart from market leader Flipkart, the other contenders include Amazon and mobile marketplace Paytm which is backed by China’s Alibaba.
“We’ve done a tremendous amount of work over the last one year, there’s far more positivity around our delivery speeds, quality of deliveries and customer experiences,” said Rohit Bansal, co-founder and COO, Snapdeal. In March, Bansal had said that the company would look to spend about $ 200 million (Rs 1,332 crore) over the course of the current fiscal, as it looks to grab a larger slice of the country’s lucrative consumer spending pie.
Last month, Snapdeal closed a $ 500-million round of funding led by Foxconn Technology Group, Alibaba Group and existing backer Japan’s SoftBank, which valued the firm at about $ 5 billion. IIT Delhi graduate Bansal who co-founded the company with Wharton alumnus Kunal Bahl, estimates that his company has been able to increase the speed at which orders are delivered by nearly 70% in the last six months.
“Earlier it used to take about 5 days on an average to deliver a product, to all pin codes across the country. That’s now come down to 2-3 days,” he said. Snapdeal’s focus on supply chain and logistics infrastructure is critical if the company is to fulfil its ambition of emerging as the winner in the Indian e-commerce battle. Critical to its fortunes will be the sales numbers the company records during the upcoming festive season, which kicks off next month. By August, the firm had crossed gross merchandise sales of $ 4 billion.
Bansal, who estimates that his company has the capacity, at present, to fulfill 1,000 orders a minute, has a specific goal to be able to fulfil “10,000 orders a minute at peak time”. While Bansal declined to disclose Snapdeal’s sales targets during this period, he said that the firm was looking to double the size of its fulfilment or warehousing space.
In the last six months, the company has built about 1.3 million-1.4 million sq ft of fulfilment space with 63 centres across about 25 cities. While 2014 Diwali was seen as the coming of age of Indian e-commerce, with both, Snapdeal and Flipkart, recording impressive sales numbers, it is better remembered for the companies’ technology platforms failing to meet the huge consumer demands, poor logistics and lack of last-mile delivery infrastructure.