Get a demo Do I subscribe? News sign-up
Print

Snapdeal takes Dharavi model nationwide

News, 16 March 2015

MUMBAI: India's booming ecommerce market has largely focused on middle-class consumers, but number two player Snapdeal is aiming at a different demographic as it seeks to steal a march on its rivals.

For the past few months it has been trialling a version of click-and-collect for the 1m residents of Mumbai's Dharavi, made famous as the location of the Oscar-winning film Slumdog Millionaire.

As the slum dwellers have no official address, Snapdeal has established a small store, in partnership with remittance provider FINO PayTech, to where orders made on shared computers can be delivered. Buyers can then pick up from the store and pay cash for the items.

Snapdeal is now planning to set up similar outlets across 65 cities and over 70,000 rural areas by the end of this year.

"The metro cities are not the majority sales contributors for us anymore; it is the non-metro cities that bring more sales," Sandeep Komaravelly, svp/marketing at Snapdeal, told The Times of India.

He added that partnerships such as that in Dharavi contributed only a tiny share of current revenue, but the company was drawn to the untapped potential.

These consumers typically purchase products like low-end mobile phones and accessories, dishes and shoes where there is less scope for the sort of deep discounts that have so far driven the online shopping market in India.

And while investors have been ploughing serious money into India's ecommerce businesses to help fund such activity – Snapdeal itself is reported to be in talks with China's Alibaba about an investment of up to $700m – it cannot go on for ever.

"There is enough money now, but it will soon dry up," according to an executive at a private equity firm. "There is definitely investor pressure to increase margins."

Snapdeal, however, is not the only one looking at logistics as a way of tapping new markets. Amazon India is expanding its delivery services and linking with corner stores and kiosks to act as pick-up points.

The area of logistics has been a particular problem for India's ecommerce industry, highlighted in the number of complaints from consumers about non-delivery or wrong delivery during several heavily promoted sales during the final quarter of 2014, the so-called Diwali debacle.

Data sourced from Times of India, Financial Express; additional content by Warc staff