Hardly three months after talks for acquisition by e-commerce market leader Flipkart fell through, Gurgaon-based online marketplace Snapdeal has claimed that it has managed not only to increase sales but also made positive net margin in the festive season sales.
For both online and offline retailers, September and October are the peak periods with huge discounts and numerous offers. Needless to say, cash burn for e-commerce players is also high as they go all-out in an effort to hike up GMV and number of orders during the period. But Snapdeal claims that its net margin for the current festive season grew six-fold compared to the festive season last year, converting a traditionally loss-making season to a profitable one.
“Net margin is the money that the platform makes as sales commission after deducting the costs of fulfilling the order, including logistics costs,” said a press release from the company.
The e-commerce battle in India, however, is still between Flipkart and Amazon. According to a report by research and advisory firm RedSeer Consulting, Flipkart had a market share of 58 percent versus Amazon’s 26 percent in this year’s festive season sales.
In July, after talks for a merger with Flipkart fell through, Snapdeal Co-founder and CEO Kunal Bahl had stated that they were financially self-sufficient as a company and didn’t need to raise additional capital to reach profitability. However, keeping a tight control on costs was part of the strategy for Snapdeal 2.0.
It seems to hold true. According to the press release, Snapdeal had curated the best deals on products that its core audience frequently purchases, including in fashion, electronics and consumer durables, personal care, and value packs, among others. They had also tied up with prominent banks to offer discounts of up to 20 percent in addition to the festive discounts.
Snapdeal’s offers included free return tickets from SpiceJet, discounts on travel and hotel bookings from Yatra.com, discounts on movie bookings from BookMyShow, and a free three-month premium subscription from SonyLIV for every buyer on the platform.
“The ability to generate a positive return in times of hyper-competition and aggressive discounting comes from a well-defined strategy that focuses on building depth in select categories and steadily increasing the efficiency of operations by optimising all operational processes,” the press statement said.