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Snapdeal has worked hard to boost supply chain: Kunal Bahl

Home-grown e-commerce major Snapdeal’s consumer reach out exercises prompted the company to overhaul their brand positioning to represent what the youth of the country feel and believe in — the future will be better than the past. “Our goal is that consumers across India should be able to unlock their aspirations,” said Kunal Bahl, Co-founder and Chief Executive of Snapdeal, explaining the rationale behind its Unbox Zindagi campaign. The response to the new campaign has been very good, he added.

Bahl said over the past one year, the etailer has spent a lot of time and resources in increasing efficiencies in supply chain and logistics, category management to deliver better value to customers and sellers on its platform. “In August we opened 1 million square feet of warehousing space for seller where they can pre-stock products,” he added.

Snapdeal is also giving collateral-free loan of Rs 1,000 crore to sellers. Bahl said access to reliable and cost-effective credit has been one of the biggest problems for medium and small businesses in India. For the Diwali season, scores of sellers have taken loans to catalyse their business and leverage increase in demand, he added.

Snapdeal has also ramped up next-day deliveries by making more the feature available in about 100 cities as lot of customers opt for the option, Bahl said. Snapdeal Gold was launched to help customers get quicker deliveries at not cost once they pay a membership fee, he said. Besides, Snapdeal has also partnered with banks to offer benefits to customers, he added.

Below is the transcript of Kunal Bahl’s interview to CNBC-TV18’s Shweta Kothari.

Q: You recently launched a brand new campaign called “Unbox Zindagi”, what has the response been so far and what was the strategic rationale behind coming up with this new campaign?

A: We as a brand have been around for about 5-6 years now and we have followed a similar trajectory from a brand positioning standpoint. However over the last one year, we have spent a lot of time meeting consumers across the country in their households, in their offices, going shopping with them in markets and one thing became clear to us that more than ever before consumers in India especially the youth in India feel that their time has come and that the future is going to be far more positive and better than the past has been.

We said if this is really the underlying feeling of consumers in India then shouldn’t our brand represent that in its own way? Our goal is, leveraging SnapDeal consumers across India should be able to unlock their aspirations. Hence this whole campaign around “Unbox Zindagi” and it has actually worked extremely well, much beyond our expectations.

Already the word “Unbox” has become synonymous with SnapDeal. This campaign is not even a month old. So, we are very happy with the results.

Q: Does this also mean that your area of focus will now change or you will do away with verticals or businesses that are not viable to you?

A: E-commerce companies are responsible for making verticals and categories viable for themselves and you do that by focusing on efficiency of your operations. Over the last one year we have spent a lot of time, lot of energy in making our supply chain extremely efficient, our category management extremely efficient because the more efficiencies we can bring out in our business, the better value we can deliver to our buyers and sellers.

Q: You talked about changes in supply chain, what are the changes that you have made recently in terms of your infrastructure or for that matter your logistics?

A: Over the last 18 months one of our biggest focus areas, if not our biggest focus area has been investment in infrastructure for logistics. Traditionally we were a market place that connected buyers and sellers and sellers would ship products directly to consumers. However over a period of time we started realising that despite us being a market place consumers want the best possible experience and sellers often times don’t have the wherewithal or the infrastructure to deliver the best experience.

So, we have built millions of square feet of space, interestingly as of August, just in the month of August 2016, we opened 1 million square feet of warehousing space where sellers on SnapDeal pre-stocked their products, this we did in anticipation of the surge in volume during Diwali.

Q: So you have also taken other initiatives for sellers for that matter, a collateral free loan of Rs 1,000 crore to enable them to stock up. What is the impact that you are anticipating?

A: One of the problems that exist in India with especially small businesses is access to reliable and cost effective credit, especially the medium and small businesses who can’t necessarily go to banks or informal channels everyday to get short term loans either because it too cumbersome or it is too expensive.

So through Capital Assist which is our seller financing platform where we worked with banks and NBFCs who leveraging the data we have about the sellers’ sales on SnapDeal give them great very short term loans at very reasonable rates of interest, where for sellers if they go raise capital or go get working capital from offline channels it may cost them 3-4 percent a month, we give it to them at 1-1.5 percent a month and that’s how their business grows on SnapDeal.

Just this Diwali we have had 100s of sellers who have taken loans over crore rupees just to catalyst their business and leverage the increase in demand that has happened this diwali.

Q: We are already in the midst of festive season, what’s the response being so far and what are the initiatives that you have taken to boost sales?

A: A lot of our initiatives are around delivering a great customer experience, so couple of initiatives that we have doubled down on over a last few months are increasing our footprint of next day delivery, so if you ordered product today you will get the product in the next day and we offered that in over a 100 cities now and we have seen a massive uptick this diwali about 15-20 percent of all our orders consumers are availing of next day delivery option.

We launch a new service called SnapDeal Gold which goes in hand in glove with our next day delivery footprint, very few prepay using a credit card or FreeCharge or debit card or net banking you get a free upgrade to next day delivery at no extra charge. We have seen consumers really take that up. We have also partnered a lot with banks this diwali. Every day of the month some bank or the other is actually offering an additional discount to their consumers, which has also driven a lot of demand for us.

Q: I want to first talk about the marketing spend which is about Rs 200 crore which stands prior to the festive season, how confident are you that you will be able to cash in on this money that you have spent?

A: A lot of people ask us this question, are you spending too much, are you spending too little? The right answer is, you almost never know. We felt based on our plans that this was the right amount to spend. I am very happy that over the last 30 days since we launched this campaign we have seen a doubling of our traffic. Our daily traffic has doubled in the last 13 days and that is very visible in everything we are doing in terms of seeing significantly enhanced interest of buyers, significantly enhanced interest of sellers. It is also extremely galvanising for the team because they see a very well thought out campaign being appropriately externalised.

So, overall I would call it a very good success. I think all of my expectations have mostly been met but the key is to keep raising the bar. So, now we are raising the bar ahead.

Q: We will talk about discounting norms that have recently changed over last one year which actually prevent you from making any promotional offers or cash backs. Has it has any impact on your sales performance?

A: Sellers are providing the promotions to consumers. If you go to an offline market, in a mall or in a high street location or a bazaar, the seller is providing the discounts. Our view is our goal is to facilitate a great customer experience, a great seller experience and bring a lot of traffic of buyers to the sellers. After that it is really upto the sellers whether they want to sell or not.

We can help them with a lot of analytics about what are consumers looking for, like for instance if full sleeves black shirts with V neck is very popular, it is because we see that from our search trends, it is our responsibility to offer that information to sellers and some will act upon it and some will not act upon it. Those who will act upon it will succeed and build large businesses online and those who don’t wont.

Q: So, has there been no change at all?

A: What we are seeing is that there is a clear separation that is happening amongst the sellers, some sellers are becoming very successful online and some are actually falling away. A lot of it is because the ones who are falling away are not being innovative in understanding pricing because the onus is on them to price appropriately, they are not understanding the category mix well, but we are also helping them to be successful.

Q: What are the initiatives that you have taken at your end to ensure that the sales target remains constant?

A: We have to as a market place focus on doing the right things for the long run. I think doing the right things in the long run for us is largely focused on customer experience and I would also argue building a very efficient operation.

So, on customer experience we have done a lot around next day delivery, we have done a lot around making sure majority of the products that are ordered by consumers are pre-stocked in our warehouses so that they can be checked properly before they are shipped out.

My view is that the real magic moment for consumers and e-commerce is the moment of delivery, that is why you placed the order, that is why you went to the app or website, that is why you are engaged with e-commerce.

Q: For some of them its discounts also.

A: Possibly. I don’t think that is unique behaviour exhibited only for e-commerce. You should see the lines when the Diwali sales happen offline, the lines are long there too. However we really want to own the magic moment of delivery and hence the red box, hence the surprise gifts that we put in many of the packages which consumers don\’t expect. There are many other innovations we are doing so that we make the point of delivery and the point of opening the box extremely delightful.