Snapdeal is one of the fastest growing e-commerce companies in India. Rohit Bansal, Snapdeal’s COO, is the man who built the systems and the engine to keep the massive e-commerce company running smoothly. In this conversation, Rohit shares the unique supply chain model Snapdeal has in place, and his views on e-commerce growth in India.
Excerpts from the freewheeling conversation:
Best friends and co-founders
Both Kunal Bahl and I went to high school together. Kunal went to the US for undergrad, while I went to IIT Delhi. We remained in touch, talking often about what we wanted to do and who we wanted to become. We thought we should do something on our own, and this resolve only grew more firm with time. Both of us graduated at the same time in 2006. Kunal joined Microsoft and I had joined Capital One. What really sealed the deal for us was that we told ourselves that we had nothing to lose. We were thinking that if all hell were to break loose, we would still be able to find jobs for ourselves considering we had good education. And we didn’t want to regret later that we didn’t take this decision. So we decided to take the plunge.
Early days of startup was the real University
After college, we knew theoretically how to solve problems, various ways of approaching the problem and how the world works. We were great with concepts, but we didn’t have much understanding of how the real world worked. First two years of our startup was the real University for us. Creating a lot more out of nothing requires something more than theoretical knowledge.
Being persistent with people when we needed to get our point of view across and convince them and do that while keeping our head up are the few things that we have learned during our initial years of entrepreneurship.
In India, people stop taking your calls when they know you are young. You then need to start showing up at people’s offices. Kunal and I used to call it “standing ovation” because we used to stand outside offices all the time. Once I remember, I worked from the reception of a corporate office for two consecutive days, because the person just would not take my calls after he agreed to sign up.
Evolution of Roles between co-founders
We knew each other’s strengths. Things have evolved over time, and things that I enjoy doing are also the things that I am good at, and things that Kunal enjoys are also the things that he is good at. So over a period of time, the roles and responsibilities got split. The primary things that I am responsible for are product management, technology and supply chain.
Hire people smarter than yourself
One thing that I feel very thankful about is the advice from one of our mentors – always hire someone smarter than yourself. We have taken that advice very seriously. We have extremely smart people in our company. I think what really keeps us going is having a missionary approach to solving the problem. The purpose of our company is to remove friction from e-commerce. Organized retail has not grown the way it should have grown in India, as it has in many other parts of the world. On one side the consumer doesn’t have enough choice, on the other side there are all the suppliers, manufacturers and distributors etc who are also suffering due to lack of infrastructure. The manufacturers have to talk to hundreds of distributors who have to go town by town and distribute the products. What we are doing is we are removing friction for both the sides. What we give is instant wide coverage for their products, and on the other side there are consumers who want to buy all these things. How do we allow them to buy whatever they want sitting at home at great price is what we focus on.
Selling to potential employees was the hardest part
It is very hard. This was probably one of the hardest things to do for us in the early days. People talk about how one has to sell to investors and potential clients, according to me it takes 20 times more effort to sell to potential employees. You have to convince parents of 20 year olds that your child is safe with us, and that we will give him/her salary every month and won’t run away over-night. I think it is changing now, with more new startups scaling and becoming bigger brands, people have more examples to relate to. They can relate to the fact that companies can go big, and they can go list in the US. But when we started, it was much worse because people had no faith in new companies.
We try to differentiate between people who talk really well about what they have done, and those who actually have and can do really good things. We are focussed on people who are doers and can execute things.
We would never have launched Snapdeal, had we not kept experimenting and trying new things, and we want to make sure this culture of experimentation continues in the future. As the company starts getting bigger, there is a tendency for everyone to get complacent. People tend to start protecting what we have built, rather than trying to figure out what new we must do. We spend a lot of time in ensuring that this culture continues. We keep our team sizes very small in the company. Teams have clear deliverables, but how to get something done is entirely up to them. Teams don’t need approvals for decision making etc, there is a lot of entrepreneurial energy in the company. There is a lot of experimentation and innovation going on always.
I think Delhi has been pretty good in terms of attracting technical talent. There are fewer foreign technology companies in Delhi, and I think there is good talent pool with lot of good colleges around. Over time, we have emerged as the de-facto employer for technology professionals wanting to relocate to Delhi.
Supply chain best practices & the marketplace model
We have 20,000 sellers on the platform today. In hindsight, one of the most important and the best thing that we did from supply chain standpoint is build our supply chain system. If you look at all the marketplaces in the world, they have a very low touch fulfilment system – Once the buyer purchases the product, it is really up to the seller how they plan to ship the product. Sometimes there is inconsistency in this process, and it creates anxiety for the consumer. The consumer doesn’t know what to expect, the experience is not predictable.We strongly felt that this doesn’t seem to be the right thing to do in India, that there should be a better way to do things.
Back home, many companies were starting their own delivery networks, and building everything from scratch. We didn’t really find value in that approach, because there are so many third party logistics companies in the country already. When your core business is being an e-commerce company, then you can leverage the knowledge and expertise that has already been built by existing supply chain companies, and that is what we did. ,
We integrated a system that ranks the best courier companies based on location and type of delivery. As soon as a buyer makes a purchase, the seller gets to the see what is the best option available for him for that pincode.. Hence this keeps the quality high and costs low. We are able to get courier companies provide attractive prices for our sellers, and for the buyers the products can be tracked all the time. Because of this system, we are able to ship 90% of our orders in 24 hours. I don’t know anywhere in the world, if an e-commerce company has a model like this, and it has worked out really well for us.
First of all, most of the senior team in the company has no e-commerce experience, and that is a good thing for us, because we do not come with preconceived notions. We travel quite a bit to understand models across the world. However, one advantage we have in India is that we sort of moved from landline to mobile right away. Being a developing country, we can sort of learn from 30 other countries who are ahead of us and make something better than everyone else.
In all honesty, we realized that marketplace e-commerce model is a much better model for us. In fact, outside of the US, take any emerging market, Brazil, China, Japan, South Korea, everywhere the largest e-commerce company is the marketplace company, and there is a strong foundational reason for that and that is why we chose to do what we are doing.
What do we spend most of our time on
We are at a point where we are spending most of our time on educating and bringing our ecosystem to speed. Right now, e-commerce is reaching critical mass in India. Now we sort of spend a lot of time educating our seller partners and logistics partners, and educating them about e-commerce. We have to ensure everyone is realizing how large e-commerce is becoming and how fast. There are many large merchants in India who are still not aware of what the internet will mean for their businesses, and our job is to help them realize how internet will help them benefit. Also working with the logistics companies to help them build their supply chains, at the end of the day we are the end consumer interface for them. We sort of keep a pulse on what the consumer trends are and what they are looking for, and they come to us often to tell them about any opportunities they are missing. The logistics companies realize that e-commerce is the future of their business.
Investors as sounding boards
From all our investors, we have learned a lot, and of course from Kalaari and Vani. When we were starting we were really young, and people would look down upon someone who was starting something on their own. And at that time Vani and Kalaari as a firm has been very empathetic to our business. When things get tough, and are not moving despite a lot of effort, it is great to have someone who has experienced all of these things in the past and can actually understand your state. As we started maturing, the advice we received from Kalaari kept adding value. We are very thankful to Kalaari and Vani for supporting us when nobody would. And having that high level of trust in our abilities and continuing to support.
The upside for e-commerce in India is huge
In the developed world, e-commerce forms 5-13% of the developing market, that is typically the range,which is the spectrum of how large e-commerce is. In India, e-commerce is 0.25% today, and that number is bound to grow significantly to 4% at least. Retail is growing so fast in India that this is going to be a trillion dollar market. We have to get everyone to make their first purchase online, after which they will be hooked for life.
I think all our partners can do a lot. I think logistics companies can do a lot. We actually work with our logistics partners on a weekly basis to plan out the projections for the coming week, month or the quarter. I think they are doing a good job at developing the infrastructure, but increasingly more investments will go in to make that infrastructure more robust. Our company has grown six to seven times in the last 12 months.
What to expect from Snapdeal in 2014
I don’t think our purpose or mission will change, which from day one has been to remove friction in e-commerce and take the best products to our consumers at the best possible prices. We think of e-commerce as a way of life. You will be surprised by the number of people who buy their kitchen accessories, home decor and automotive components online. The problem we are solving is a very different kind in India, as a country we are starved for selection. If someone is looking to buy something core for their daily lives, they should buy it online. “How do we get a large part of India buying their core things online?” We are going to spend a large part of our 2014 focussing on that. Today about 30% of our traffic comes from mobile. We are going to invest a lot of energy in building mobile. We want to be India’s largest mobile commerce company too.
When not working…
There are only a few hours in a day. My wife and I both like to travel to different places, and that sort of helps us enrich our own experiences in terms of understanding how the world works. I used to read a lot, not so much anymore. But whenever I get time, I try to read an autobiography or a good business book that I can get my hands, I also like books on sociology.
I realized that at any given point in time, it is very hard for a person to have more than four or five priorities. As you grow, there are 10,000 things that are waiting to seek your attention, but shrinking that number to five is really the hard part. You need to do five things to go really well, it is important to figure out what those things are, and spend disproportionate time on those things, and make sure you get those five right. If you have 200 things as priority, it means you have no priority.
Advice for entrepreneurs
Don’t stop trying, if you have smart people and you keep trying you can’t fail all the time, something has to work. It is very important launch your product very quickly and start getting real feedback from real users of your business.
The post was initially published on Kalaari Capital blog.