Snapdeal to spend additional Rs 660 crore to Strengthen Supply Chain and Logistics Operations

NEW DELHI: Online marketplace Snapdeal aims to spend an additional Rs 660 crore ( $100 million) to strengthen its supply chain and logistics operations, as it prepares to battle for greater market share in the upcoming festive season.

The move comes at a time when the New Delhi-headquartered company, the country’s largest online marketplace in terms of sellers transacting on its platform, is aiming for the top slot in India’s fiercely contested online retail industry where, apart from market leader Flipkart, the other contenders include Amazon and mobile marketplace Paytm which is backed by China’s Alibaba.

“We’ve done a tremendous amount of work over the last one year, there’s far more positivity around our delivery speeds, quality of deliveries and customer experiences,” said Rohit Bansal, co-founder and chief operating officer, Snapdeal.

In March, Bansal had said that the company would look to spend about $200 million (Rs 1,332 crore) over the course of the current fiscal, as it looks to grab a larger slice of the country’s lucrative consumer spending pie.

Last month, Snapdeal closed a $500 million round of funding led by Foxconn Technology Group, Chinese ecommerce giant Alibaba Group and existing backer Japan’s SoftBank, which valued the company at about $5 billion

IIT Delhi graduate Bansal who cofounded the Delhi-based company with Wharton alumnus Kunal Bahl, estimates that his company has been able to increase the speed at which orders are delivered by nearly 70 % in the last six months.

“Earlier it used to take about 5 days on average to deliver a product, to all pin codes across the country. That’s now come down to 2-3 days,” he said.

Snapdeal’s focus on supply chain and logistics infrastructure is critical if the company is to fulfil its ambition of emerging as the winner in the Indian ecommerce battle. Critical to its fortunes will be the sales numbers the company records during the upcoming festive season, which kicks off next month. By August, the company had crossed gross merchandise sales of $ 4 billion.

Bansal who estimates that his company has the capacity, at present, to fulfil 1,000 orders a minute has a specific goal to be able to fulfil “10,000 orders a minute at peak time.”

While Bansal declined to disclose Snapdeal’s sales targets during this period, he said that the company was looking to double the size of its fulfilment or warehousing space. In the last six months, the company has built about 1.3 million-1.4 million square feet of fulfilment space with 63 centres across about 25 cities.

While 2014 Diwali was seen as the coming of age of Indian ecommerce, with both, Snapdeal and Flipkart, recording impressive sales numbers, it is better remembered for the companies’ technology platforms failing to meet the huge consumer demands, poor logistics and lack of last-mile delivery infrastructure.

According to Bansal, Snapdeal is far better prepared this time around.

“This time we are making sure we are super-prepared for Diwali and preparing for 10X the scale,” he said.

Originally posted in The Economic Times

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