We at YourStory.in caught up with Kunal Bahl, Founder of Snapdeal, for a quick conversation post the announcement of Snapdeals’ eSportsbuyacquisition.Why sports? What prompted this acquisition?
We believe that the opportunity e-commerce is addressing in India, is not around transaction substitution. Say there are a billion dollars worth of mobile phones now available in India. The opportunity is not that 10% of those will now sell online, it is that there are tons of sellers, manufacturers, brands, international and national, on one side, and there are millions of consumers who are willing to buy these products on the other side. And, the real value of e-commerce is creating those transactions and facilitating them. If you put that philosophical macro thought to the sports business and fitness goods business, you’ll know for sure that the trend is moving forward. People are now playing more sports other than cricket, people are more inclined towards being fit, people have less time, so they are owning a lot of these products in order to be self-sufficient in their fitness. And, we are also seeing that the market size of this industry is increasing rapidly. It is 2 billion now; it is going to be about 2.7 billion by 2014. That is a pretty large market size, but the supply chain side is very broken. If I ask you, where to go and find a squash ball, you might not know. But in case you want to buy a Nike shoe or a samsung phone, you still have the option of going to Lifestyle to buy these products. In the case of sports, it is totally unorganized. I remember there was a company called Royal Sporting House that began about 10 years ago and that shut down eventually. They had very limited products, maybe 10 types of squash balls, 5 types of basket balls etc. On one hand, we know that there are people who are willing to buy these products and are knowledgeable about the products; on the other hand, we also know that there are a tremendous number of sporting brands, both domestic and international and, India is one of the largest exporters of sports goods in the world. But, right now we do not have a local consumption market, as the local supply chain is completely broken. No brand or manufacturer wants to deal with 10,000 shopkeepers. There is no organized player in this space. So, I think in those kind of spaces, where the offline supply chain is completely broken, e-commerce will be where people will buy these products; they would eventually stop buying them offline because it is too inconvenient. Let us say I go to buy a bat, the guy, looking at the car I get out of, will charge me 2,000 INR or 10,000 INR for the same. And, people trust us, they know when they shop with us that we are selling it to them at the right price. I think that plays a key role. So, the supply chain is broken, people don’t trust the price they get offline, and lastly, the origin of branded goods is questionable. There is a lot of duplicacy when it comes to branded goods offline. And, because we are taking the responsibility and working with brands directly through this acquisition, putting up only genuine brands on the site, we are able to build consumer trust.
They have been doing this for a year; they have a very deep understanding about the sporting goods market; they know how people buy and how people think about buying sporting goods etc. While that may seem like a trivial thing, it is a lot more complex. When you go to their site, you will see that there are so many categories, the categorization is not all that trivial, and you have to understand each of these categories and build categorization according to that, then you have to populate it with branded products. All that takes a lot of time, energy, understanding and focus. And, those are the capabilities that they have brought to us.
Over the next few months, how do you see the integration happening, between the teams as well as the sites?
The integration process is already on and I can’t share too many details on what we are going to do there as of now. But, I can only say that the integration process is on and we will ensure that it runs smoothly.
Are there any other categories that you are looking at for further acquisitions?
Yes, we are very actively looking at more acquisitions. We are talking to a bunch of companies, and there is a lot of excitement and trust amongst the companies to work with us; we have a strong homogeneous culture that has helped us attract all the high quality talent. So, we are currently talking to different categories of e-commerce companies, and you will see us being very aggressive going forward. We have traditionally been a very conservative company when it comes to acquisitions; because for us, it is very important to meet the right teams to be able to work with them. That is the number one criteria, everything else is secondary. But, we will continue to be quite aggressive on the acquisitions front.
Is there anything else that you would like to share with our readers regarding the acquisition?
What was very important for us is the quality of entrepreneurs at eSportsbuy. They have done a great job bootstrapping the venture. When we push our 15 million users to buy sports goods on Snapdeal, we know, that together, we will build the largest category in that space.
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