How a failed merger birthed a strategy for India's non-metro markets
In short: In 2017, Snapdeal's attempted merger with Flipkart collapsed due to internal board disagreements over valuation and payouts. Instead of retreating, the company pivoted to a radical new strategy. By shedding non-core businesses and focusing on the value e-commerce segment, they achieved a massive 95% reduction in losses.
The pivot, known as Snapdeal 2.0, marked a fundamental shift in the company's identity. After the failed merger with Flipkart in July 2017, Snapdeal divested from ventures like Freecharge and Vulcan Express. The goal was to concentrate resources on its core marketplace, specifically targeting the 'value e-commerce' segment. Kunal Bahl estimated this market to be three times larger than the market for branded goods, representing a massive opportunity to serve price-conscious consumers.
To capture this audience, Snapdeal adopted an asset-light operating model. This involved decentralised logistics and minimal inventory to keep costs low. Crucially, the company sought to replicate the experience of traditional Indian bazaars online. Because over 90% of their orders come from non-metro users, they focused on three key themes: video, voice, and vernacular. This approach prioritizes helping users discover and transact products rather than simply pushing sales through traditional digital tactics.
The results of this strategy were significant. Between 2017 and 2021, revenue grew by 74% at its peak, while unique customers tripled to 27 million between 2018 and 2020. By joining the state-backed Open Network for Digital Commerce (ONDC), the firm strengthens its presence in non-metro zones, which currently account for more than 86% of its total revenue. While the company cancelled a $152 million IPO in late 2022 due to market conditions, its strategic focus remains on the diverse, high-volume needs of India's smaller cities.
The platform currently hosts over 500,000 sellers and serves shoppers in more than 3,700 towns. It has successfully attracted major FMCG brands like Godrej and Himalaya, as well as newer brands like Mamaearth, to reach customers outside of major metropolitan hubs.
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- Summary by Intellect · source: Snapdeal
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