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Kunal Bahl, Founder, Snapdeal.com on building India's largest Group Buying website

Sunday May 22, 2011 , 8 min Read

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It’s almost impossible to go through the startup ecosystem today, without hearing chatter about e-commerce and group buying. And as it is usually in these cases, those who profess belief in this wave are evenly matched by the naysayers who are convinced that it’s a bubble waiting to burst. But one thing that almost everyone agrees upon is the fact that when it comes to e-commerce and group buying, the figures involved are invariably mind-boggling.So, we at YourStory caught up with Kunal Bahl of Snapdeal.com, the poster boy of this group buying ‘revolution’, to understand the story behind the colossal success that Snapdeal is today. As India’s largest group buying website selling discount coupons to everything from restaurant meals to spa treatments, Snapdeal claims to have 3 million subscribers, with one new customer getting into fold every second. Within one year of inception, Snapdeal made it to the Alexa list of the 25 most visited websites in India. If “Indians love discounts” is the adage, then Snapdeal is the proof point.

Now, it doesn’t take a rocket scientist to notice that they’re doing extremely well. But what is driving all of this? Where is it headed? YourStory brings you the answers from Kunal himself, the brain behind Snapdeal.com

It’s a long way to the top

Quiz him on their scarily rapid ascent (they started in February 2010) and Kunal will politely tell you that they have a long way to go and that he’s not satisfied yet. He admits that they’re taking a lot of risks and that while such risks might have gotten them where they are now, he is not entirely sure about the future outcomes. “Experimentation leads to innovation. Sometimes, you’ll fail. But when one of these risks work, it’ll make up for everything”, says Kunal.

But isn’t he worried that this might be, as many rush to warn, a bubble? The man with a business majors from Wharton and a marketing degree from Kellogg disagrees. “Snapdeal’s got one of the best teams in the Internet industry today. Both my co-founder (Rohit Bansal) and I are less than 30 years old and we don’t have too much work experience. When we started, we didn’t even know how to run a Google AdWords campaign. But we’ve hired some brilliant people, the brightest guys across various functions. And they will help us see this through”, he states with confidence.

And that’s not happened easily. Kunal confesses to being a part of close to 3000 interviews in the last two years. Snapdeal currently employs 400 people across 50 cities and they’re adding another 75, every single month. And the target? 800 people by the end of the year. With 5-6 rounds of interviews on an average, Snapdeal’s not an employer that most people can break into easily. But Kunal believes that those who make it are in for an exhilarating ride.

“We’ve got 70% of the market share. As of today, the industry’s worth about Rs.250 crores and it’s growing phenomenally fast. It’s going to be a Rs.10,000 crore industry in the next 4-5 years.  I read some report which stated that Indians notch up discretionary retail spending of about $120 billion. We’re trying to move the ‘buying’ portion of this, online. Even a 2% conversion will make us a two-billion dollar company”, he points out.

Customer is king

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Essentially, the success of group buying lies in bringing people together to buy in to a common object of desire. Now, how does one know what works and what doesn’t? Kunal makes no bones about the fact that understanding what customers want will make or break Snapdeal. And to do that, he stays very close to the ground.“I buy from most of my competitors to understand what can be done better. And that’s almost always customer experience. We do lots of research. We’ve built up our technology from scratch. So, most of it is proprietary and highly cutting-edge. As a company, Snapdeal’s very process-driven. But at the same time, I make it a point to visit merchants and the sales teams every Saturday. I ensure that mails are responded to within 48 hours. And why do I do this? Because I have to know what’s happening around us, to take decisions that’ll help us scale. And let’s be honest – scale is the only strategic aspect here”, remarks Kunal with candour.

‘When the world zigs, zag’

Indians are known to love discounts and freebies. But couponing never really took off here. Until Snapdeal came along, that is. Kunal fondly recounts his earlier days, where he did a lot of couponing for his detergents business. “We were stupid and irrational enough to believe that coupons could work here, when there was much proof that they hadn’t. And today, we feel vindicated. Anyway, the short term economic benefit of entrepreneurship will never make sense”, he says, with the clarity of someone who’s seen it all.

Investor mera dost

“When we sought out funding, we got 5 term sheets. But we didn’t pick the one with the highest valuation. In fact, we took up the one with the third highest valuation because we were very clear that we wanted to work with people who had been entrepreneurs themselves”, says the man whose venture has raised $12 million from Nexus Venture Partners and Indo US Venture Partners.

And his logic seems impeccable. Kunal argues that they were, at one level, creating the category and that meant mistakes were likely. Brimming with respect, he says that he derives a lot of inspiration from his investors and that their empathetic attitude in understanding that mistakes are unintentional helps him keep his faith in trying to get that one big ROI initiative to click.

To illustrate this, he mentions the fact that Snapdeal was the first non-travel e-commerce company to do a television commercial (TVC). “Most investors would’ve turned down the idea, saying that there was no way to track ROI. But we just had a small chat with them and they said, go right ahead. And that really helped. It was a gamble that paid off beautifully. The ROI was mind-blowing and our top-of-the-mind recall went off the charts”, says the young entrepreneur, beaming with pride.

Grabbing Grabbon

Ask Kunal what’s the wisest decision that Snapdeal has made till date and he wastes no time in telling you that it was the acquisition of Grabbon. Snapdeal acquired Bangalore-based group buying startup Grabbon in the second half of 2010 and it’s interesting to note how it all happened. During one of his regular merchant-visits on a Saturday in Bangalore, Kunal heard Grabbon’s name being mentioned in a favourable light by the merchants that he was visiting. They told him that the Grabbon guys paid heed to what they said and did very constructive work.

“In this business, owning merchant relationships is vital. They were one of the very few who had realised that and that really got us interested. So, we met them in July last year and very soon, we found that they were a brilliant bunch, being more interested in building something great rather than just owning everything. Anyway, if you build a large enough business, everyone can share the spoils. Hence, we struck the deal in about 3 weeks and the top guys there took senior roles in Snapdeal. And today, they are a very important part of Snapdeal’s success”, muses Kunal. Prod him about whether they’re looking at other companies to buy out and Kunal makes it amply clear that they’re not looking at more acquisitions now, with the focus being on developing strength.

Jumping on to the product bandwagon

Traditionally, group buying sites tend to focus on services (like restaurant meals, gym memberships etc.). But Snapdeal has moved on to products as well. Last month, Snapdeal made history by selling 30,000 deals in one day. It was an Airtel recharge voucher worth Rs.100 that they sold for Rs.50. But Kunal insists that the offering is irrelevant and that he would’ve been happy even if one of his competitors had achieved this feat, as it simply illustrates that people are open to buying online. Snapdeal also managed to sell 1000 Reebok sunglasses in one day, offering a whopping 70% discount. Recently, they offloaded 300 Gucci wallets in one hour, again giving it off at 70% of the original price.

Kunal is betting big on the product play with Snapdeal. “Currently, we’re doing only 2-3 product deals a day. But that’s really beginning to take off now. It’s very easy to plop 10 different products on the site. The challenge is in servicing the demand for those. Right now, we’re offering fewer SKUs, but better service. And really, whatever we put on the site just sells. In one quarter, we should be doing 10-15 product deals a day and that, we believe, will push us to over 6 million subscribers.”

With Snapdeal's revenues currently heading north of Rs.100 crores, Kunal is a picture of confidence when he states that they’re building a billion-dollar business. And when he says that Snapdeal worries less about having enough addressable customers and more about growing at a faster rate than everyone else, you realise that they’re not building just an enterprise. They’re building a free-wheeling juggernaut.

We at YourStory are going to be following Snapdeal’s journey in the days ahead very closely. So, do watch this space. To experience Snapdeal, check out www.snapdeal.com. Also, please share with us your thoughts and views on this story by writing to us at [email protected].

Sriram Mohan | YourStory | 21st May 2011 | Bangalore