Snapdeal likely to raise funds in less than 5-6 years, exploring both private and public avenues, says CEO Himanshu Chakrawarti

DH INTERVIEW

After a revival attempt through Snapdeal 2.0, the e-commerce company is channeling efforts into a slow but steady play. Speaking to DH’s Shakshi Jain, the ecomm player’s chief executive Himanshu Chakrawarti shed light on Snapdeal’s business this season, fund raising aspirations and online shopping trends dominating its target audience in the tier II/III markets of India.

Edited excerpts.

Some pockets in the economy are still reporting subdued demand numbers this year, compared to pre-Covid times. What has your experience been?

Overall the growth pattern does look soft, but we are not impacted in the value segment. This is because of the nature of the shift that is happening. If you look at the value lifestyle segment where we operate, approximately 75 per cent are mom and pop stores, bazaars, mandis. Around 17 per cent are organised retail. Just 8 per cent are online. And here, more and more new customers are coming because the internet base in India is fairly large. They are coming from in from the other two categories. 

State some trends observed amongst tier II/III shoppers.

We see distinctly different kinds of behaviour on the basis of cohorts. For example, the very young audience (16-23 yrs) are very similar to their metro counterparts, in aspirations - taste, preference and requirements. But the wallet size is much lower. So they are happy to make the compromise on quality. Therefore there are platforms which do not necessarily have the same quality but are replicating the aspirations of the US designs at scale.

What is the breakup between cash on delivery (COD) versus prepaid orders on Snapdeal, and what is the frequency of returns with your target audience?

We have a COD component of almost 87-88 per cent of our business. Only 12-13 per cent is prepaid. On returns, there are two types of returns. One is where the packet goes undelivered and comes back. This is something which happens much more with the COD packets, for multiple reasons. That number is very high for COD packets. 

Second is customer returns, where they take the delivery but return them for whatever reasons. The good part is, the second component for the value segment is fairly low.

Without getting into our numbers on this, in the value segment that we operate in, the returns would probably be in mid single digits. While if you were to look at the more premium segments, the customer returns would be as high as 25-30 per cent.

Are you looking to mobilise funds in the near future?

For our current requirements and needs, we are fine. But some of the tracks may grow and will require growth capital. When we require the funding, we will be looking at both the options, which are private markets, as well as the public market. 

We are more tuned towards wanting to go public because I think it is the long term aspiration of the organisation to go public. We will do it at a point of time when we have the need and the market is right, where the funding is well. But the timeframe would be much shorter than 5-6 years.

How do logistics mechanisms differ in metropolitan regions versus tier II/III cities?

In our case, the packets are going to smaller cities and in many ways travelling longer. What we have seen from all our numbers, data science and modelling is that customers in these towns are quite happy if they get their packets in a timeframe of 4-6 days. They are not dissatisfied, unlike the metro culture. Now our entire mechanism is set to deliver in that 4-6 days timeframe. 

We have got our own first mile centres. For mid mile and last mile, we rely on third party players. Millions of data points are worked on algorithmically to optimise the time - not to make it shortest possible, but optimise on cost and land it in the region in 4-6 days. 

State one challenge for the overall e-commerce industry in India today.

We know about the serviceability and service levels in the metro cities. But how do we get a much better quality logistics and delivery ecosystem in these smaller towns? Because that is where the growth will come from. We need to solve that as an industry.