11/13/2016

SnapDealBusinessModelandHowSnapdealWorksandMakesMoney

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SnapDeal Business Model

Posted on July 22, 2016 by Unicorn Economy / 4 Comments

SnapDeal Business Model Unicorn Economy Analysis

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SnapDeal Business Model

Before we begin analyzing the various revenue streams that SnapDeal has. Lets fist have an overview of the
various facts and figures of the E-Comm Behemoth.
Let Start with Funding and Founders.

About SnapDeal Funding, Founders and Facts

SnapDeal Founders:Kunal Bahl and Rohit Bansal (another Bansal in the E-Comm).
SnapDeal Funding: SnapDeal business model has led to this behemoth getting funds from every corner.
Snapdeal has so far received a funding of $1.62 Billion from Nexus Venture Partners, Indo-US Venture
Partners, Bessemer Venture Partners, Kalaari Capital, Intel Capital and Saama Capital Blackrock, Temasek
Holdings, PremjiInvest Foxconn and E-Comm Behemoths and VCs of the likes of AliBaba, EBay and
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SoftBankhave funded SnapDeal. One of the worlds largest pension funds, Ontario Teachers Pension Plan,
and Singapore-based investment entity Brother Fortune Apparel have also invested in the company.

SnapDeal Business Model

SnapDealis owned by Jasper Infotech Private Limited. Itoperates via a Market-Place business model of ECommerce, adopted by various big players like Amazon, FlipKart etc.
Wait This was not always the case.
SnapDeal started out as a Daily deals and Coupons Website. Possibly the biggest example of a Business
Model Pivot that we could think of in the Indian Start Up Eco System.
Wait, Theres More..
They also considered the Inventory Model in the past which terribly failed and now they publicly shrug that
model as if they never thought about it.
Today they operate with the Market-place model only.

SnapDeal Business Model Sequence

1. List Sellers Today SnapDeal claims of having 100,000+ Sellers on its platform.
2. Get Sellers to become Active By Listing of the Products
3. Sellers Agree to the TnC of SnapDeal and agree on a selling commission on every order [Ranges from 530% of the Sale Value depending on the item listed to be sold.]
4. When ever any order is put up on SnapDeal by a customer, SnapDeal passes that to the seller and
arranges for the pick up and delivery [if fulfilled by SnapDeal] or else the Seller directly ships it to the
customer.
5. At the end of a certain pre agreed period of settlement of payments to Sellers, SnapDeal aggregates the
total sale achieved by a particular seller, and after deducting the sale commission and service tax, they
wire transfer the rest of the money to the seller.
The sale happens via channels as listed below & For the entire amount of sale achieved by SnapDeal for
particular seller SnapDeal will charge a percentage (%) cut on the total sale amount excluding VAT / CST.
1. Website Sale
2. Web-App on Mobile / Tablets
3. Mobile App (Android or iOS or others)
4. Direct via Tele Sales (Customer calling and Placing order Happens rarely now)
5. Via Affiliate networks (Bloggers, Coupon Websites, Review Websites etc)
6. Social Buy
7. Corporate Sales (Rewards and Recongnition Programs) and Gifting Platforms [ FlipKart does not do this]

SnapDeal GMV Calculation

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GMV is the Gross Merchandise Value i.e. the value of the goods and services sold on its platform put
together. According to estimates, it is still in the $3 $4 Billion Range.

SnapDeal Business Model

To Get a Clear Picture Read these as well: Business Model of FlipKartand Amazon Business Model

Ad Space : SnapDeal Business Model

SnapDeal is one of the top 10 most visited websites in India. Thus it gets lot of active eyeballs in sale / non
sale times.
And
People are crazy in paying for ad spaces.
Thus..
SnapDeal gets lot of requests for product launch, advertisements and stuff. Thus at some point SnapDeal
was about to put in money in Komli Media to get their hands on experience in selling ad spaces, but that deal
went down the gutter on valuation jitters.
Following people have paid money to SnapDeal for sharing the Ad-Space:
1. Samsung
2. ClearTax
3. Tata Housing
4. Housing.com
5. Windows
6. Mahindra Commercial vehicles
7. ClearTrip
8. BankBazaar
9. Uber
Some of these have fixed ad space fee and others have sale split for commission and ad space fee mixed
model.

SnapDeal Business Model via Listing Fee

SnapDeal charges sellers to be listed on the platform for selling goods owning to its high visibility website.
Plus the investment in a logistics company (described in detail below) also adds to the revenue for fulfilling
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seller requirements of shipping.

How Does SnapDeal Make Money

Companies Owned by SnapDeal

1. June 2011, Snapdeal bought overGroupbuying site, Grabbon.com.
2. April 2012, Snapdeal bought overesportsbuy.com, an online sports goods retailer.
3. May 2013, Snapdeal bought Shopo.in, a marketplace for Indian handicraft products.
4. April 2014, Snapdeal bought fashion products discovery site, Doozton.com.
5. December 2014, Snapdealacquired gifting recommendation site, Wishpicker.com.
6. January 2015, Snapdeal bought overa majority stake in product comparison website Smartprix.com.
7. February 2015, Snapdeal acqui-hired luxury fashion products discovery site, Exclusively.in. [Update:
They shut down Exclusively in August 2016 and merged their entire catalog on SnapDeal.com].
8. March 2015, Snapdeal acquired majority stake in e-comm logistics service company Gojavas.com.

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9. March 2015, Snapdeal acquired ecommerce inventory and backend management software
Unicommerce.com.
10. March 2015, Snapdeal ventured into the fintech space by acquiring a majority stake of RupeePower
which is a financial services and comparison site.
11. April 2015, Snapdeal acqui-hired and bought over a full control in mobile-payments company
FreeCharge.in.
12. September 2015, Snapdeal acquired Reduce Data, an intelligent display advertising platform.
13. Well, they were about to acquire Rocket Internet backed, troubled Myntra competitor, Jabong.com, but
were sckeptical of their wrong doings with the FDI regulations so were taking time when FlipKart came
and added Jabong to their own Cart.

Business Model of SnapDeal Subsidiaries

Business Model of SnapDeal

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So SnapDeal does not only make money from sale of products and services sale but has some other acquired
companies also making a small portion of revenue for them.
SnapDeal Business Model is mix of the following revenue lines:
1. Grabbon : Group Buying site, now redirects to SnapDeal
2. Esportsbuy : Sports Accessories Retailing E-Commerce Website, acquired, shut it and added all the
categories to its catalogue.
3. Shopo :WANNABE ETSY is what I feel, any one can sell anything without any registration hassles and any
thing else. Shopo Says no sale fee no listing fee. God knows what use is this to SnapDeal apart from one
more channel for selling goods.
4. DoozTon :No Business, but the tech for displaying the fashion merchandise used to display products on
snapdeal.com
5. Smartprix :Affiliate Website Model and Traffic Transfer via Reviews, Comparison etc.
6. Exclusively :First they bought over Exclusively.in! Then purchased the dot com version for them and
the model here is getting more and more branded apparel (ethnic and designer wear) to be sold via
Exclusively at breakneck margins (35-40%). [Update: They shut down Exclusively in August 2016 and
merged their entire catalog on SnapDeal.com].
7. GoJavas : Last Mile and E-Comm Delivery company, major shareholder is SnapDeal, which wanted to
fully acquire them but GoJavas rejected that deal. Go Javas has 450 clients including FlipKart, Zivame,
Myntra etc. MAjor Business comes from SnapDeal.
8. Unicommerce :They are a backend and inventory management SaaS (software as a Service) for budding
and upcoming E-Commerce Firms (Retail) which do not want to build their own Backend for the same.
They charge per user per month to E-Commerce companies.
9. Reduce Data: Data Analytics use for E-Commerce Companies currently serving only to SnapDeal in
India.
10. FreeCharge : Ads, Mobile Wallet, Commission for Distribution, Capital Assist, Micro Lending and Escrow
Services etc. I will describe FreeCharge in detail later.
11. RupeePower :Credit Card, Loans etc comparison website which gets SnapDeal money on selling data of
those requiring these services by Banks.

Conclusion to SnapDeal Business Model

So to Summarize the Business Model of SnapDeal, snapdeal makes revenue from the following lines of
business:
1. Marketplace Sale of Goods and Services (Own Portal of SnapDeal, Exclusively, EsportsBuy etc).
2. Convenience Fee of Seller Listing.
3. Featured Sellers on the Landing Page.
4. Advertising.
5. Payment Gateway Business of FreeCharge.
6. UniCommerce SaaS.

Disclaimer to SnapDeal Business Model

All views, interpretation and analysis of SnapDeal Business Model are of Unicorn Economy. Please use the
info mentioned here in at your own discretion, Unicorn Economy will not be liable for any damage arising out
of use of this information at your discretion.
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Business Model of E Commerce, Business Model of Snapdeal, FreeCharge, Go Javas, How Snapdeal makes
Money, How Snapdeal works, SnapDeal Business Model

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4 Comments

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RafaelBabs
August 29, 2016 at 1:44 am

What is the experience of sellers on ebay? Are sellers satisfied with the seller support and the services provided to
them?

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