Snapdeal bets big on hinterland, to offer assisted ecommerce for semi-urban and rural customers

Wednesday July 15, 2015 , 3 min Read

Ecommerce major Snapdeal, which nets over 70 per cent of sales from small towns, is betting big on rural markets and is actively assessing opportunities of partnerships for assisted ecommerce in remote areas.

"Rural markets offer a huge untapped potential and we are assessing the opportunities of tie-ups for assisted ecommerce in rural areas very seriously. We also expect a majority of our new customers to come from hinterlands," co-founder and chief executive Kunal Bahl said.

"As an ecommerce platform we can solve a real need in rural area as there is a lot of aspiration in rural markets. Over 70 per cent of our sales come from Tier II cities and below now," he added.

Last year, Snapdeal had started a pilot programme with the help of financial inclusion solutions company Fino PayTech to launch around 5,000 ecommerce kiosks across 65 cities and 70,000 rural areas within a targeted timeline of end 2015. The business model for rural markets is assisted ecommerce, and "not necessarily delivering to customers' houses directly," he said, adding supply chains are still being big issues in smaller towns.

Assisted ecommerce is where person comes to a kiosk, places an order and picks it up. While the marketplace offers same-day and next-day delivery services, Bahl said the uptake is largely an urban phenomenon. "In the smaller towns and cities, people just want the product. They don't get access to products that are genuine, reliable and at the right price," he added.

According to PTI, the company has set itself an ambitious target of getting over 1 million sellers onboard its platform over the next three years to meet its aggressive sales targets. Snapdeal has tied up with Sidbi to offer easy and cost efficient financing to its sellers. "Our sellers don't have a demand constraint. They're supply constrained as they don't have cheap working capital available to them," he said.

Bahl observed that typically, a seller saw a two to three times increase in sales during a 60 day period after their loan has been granted. "Through our various partnerships, we have lent over Rs 100 crore to our sellers through our capital assist programme so far," he added.

Meanwhile, reacting to Kumar Mangalam Birla's doubt over sustainability of ecommerce, he said every new business takes time to mature, during which multiple questions are raised and said people had doubt on mobile telecom 15 years ago but have been silenced today. "Within ten years, the benefits of ecommerce will be visible to all and all doubts would be put to rest," he exuded confidence.

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