Snapdeal Business Model | How Snapdeal Makes Money
Snapdeal is a corporation that is headquartered in India and provides services to Indian customers. Its marketplace includes both domestic and international brands. Mobile phones, gadgets, computer accessories, clothing, cosmetics, fragrances, watches, purses, sunglasses, shoes, kitchenware, and more are all available at the lowest prices on Snapdeal.
About Snapdeal
When Kunal Bahl and Rohit Bansal established Snapdeal in 2010, it was the first group deals website similar to Groupon that gave users discounts at eateries, lodging facilities, movie theatres, and other establishments. The creators hoped to replicate the strategy after observing how Alibaba.com, a massive Chinese online marketplace, operated. Since eBay was the sole online marketplace in India at the time, Snapdeal started operating in 2011. Through its digital B2C (business-to-customer) platform, Snapdeal enables independent vendors to offer their goods to Snapdeal's clientele directly. Although Snapdeal has a variety of business models, its primary business model is matching, in which it links online customers and sellers.
Rishabh Rathi
Business Model of Snapdeal
Snapdeal has a marketplace business model, which is an online marketplace that links consumers and sellers. It depends on independent vendors who post their goods on the marketplace; it does not own any warehouses or keep any inventory. Snapdeal manages the payment and delivery procedures, facilitating the buyer-seller transaction. The company can provide a wide variety of products to its consumers since it has a large network of merchants offering a wide range of goods. The foundation of Snapdeal's business strategy is giving customers access to a huge selection of products and giving sellers a platform to reach a wider audience, which boosts sales.
How Snapdeal Makes Money | Snapdeal Revenue Model
- Revenue Through Commission: The commission fees that Snapdeal charges sellers for using their platform are the main source of income for the company. Depending on the type of product sold, different commission rates apply.
- Revenue Through Advertising: Apart from the commission, Snapdeal also makes money from advertising costs for sellers who want to advertise their products more prominently, listing fees for sellers who want to offer their products on the platform, and shipping services through Vulcan Express, its logistics division.
- Revenue Through Value-added Services: Additionally, the business makes money from value-added services like customer support and packaging.
- Revenue Through Digital Goods and Financial Services: Snapdeal also makes money from its digital goods and financial services, such as internet recharging, bill payment, and the purchase of airline and bus tickets.
Snapdeal's operating revenue dropped by 31%, from INR 540 crore in FY22 to INR 372 crore in FY23. Total expenses also decreased by 36%, going from INR 1,071 crore to INR 688 crore. Advertising and promotional costs saw a significant reduction of 71%, while employee benefit expenses rose by 8%. Overall, Snapdeal's net loss reduced by 45%, from INR 510 crore in FY22 to INR 282 crore in FY23.
USP of Snapdeal
Snapdeal has developed into the first SaaS business in India to go public. Surprisingly, the business relied on sustainable expansion rather than raising primary capital to support its growth. This strategy paid off in August 2024, when Unicommerce's initial public offering (IPO) became the second most subscribed IPO of the year.
Shubham Kumar
Snapdeal SWOT Analysis
Snapdeal Strengths
- Continuous innovation and strong branding
- Large national network of retailers
- Outstanding service via easy procedures
- Numerous offers and transactions to select from
Snapdeal Weakness
- Services are not accessible in all cities
- Complete reliance on online resources
Snapdeal Opportunities
- To expand its commercial operations to other cities
- Collaborations with larger corporate entities to sell in bulk
- Offers for festive sales can attract more users to Snapdeal's marketplace
Snapdeal Threats
- Intense online competition
- Amazon and Flipkart have already seized a significant portion of the market
- Quick Commerce's network is growing quickly
Conclusion
The success of Snapdeal in the eCommerce space highlights the value of flexibility, strategic focus, and creativity. Snapdeal's tenacity in the face of intense competition and market fluctuations provides valuable insights for companies hoping to effectively negotiate the intricacies of the digital marketplace. Snapdeal is a testament to the ability of technological integration and customer-centric tactics to influence the direction of Indian commerce as it develops further.
FAQs
When was Snapdeal founded?
Snapdeal was founded in February 2010. Kunal Bahl and Rohit Bansal founded the company.
What does Snapdeal do?
Snapdeal is an e-commerce platform that sells a wide range of products, including clothing, electronics, home goods, beauty products, and accessories. It connects sellers with buyers across India, offering affordable options and discounts.
What are Snapdeal strengths?
Snapdeal's strengths include a wide range of affordable products, catering to various categories like electronics, fashion, and home goods. It has a strong network of sellers, ensuring product diversity, and a reliable delivery system across India. The platform focuses on customer satisfaction with easy returns and support, making it a trusted choice for online shopping.
