Snapdeal: Case Study on the Rise and Fall of an E-commerce Giant

This report provides a comprehensive case study of Snapdeal, an Indian e-commerce company, examining its business model, market strategies, and the factors contributing to its success and eventual decline. The report begins with an introduction to Snapdeal, its founding, and initial funding, followed by a literature review that explores existing research on e-commerce in India, including barriers, challenges, and growth factors. A company profile details Snapdeal's establishment, investors, competitors, and marketing strategies, including its initial marketing approach, referral programs, and affiliate marketing campaigns. The report then analyzes Snapdeal's market share compared to competitors like Amazon and Flipkart, highlighting the changing dynamics of the e-commerce landscape. The core of the study focuses on the factors that led to Snapdeal's failure, including quality control issues, lack of a unique identity, late entry into mobile payments, departure of senior executives, and controversies. The report concludes by summarizing the key takeaways from Snapdeal's journey, offering valuable insights into the challenges and opportunities within the Indian e-commerce sector.

S.
N
o
Roll No Objecti
ves of
Acade
mic
Activity
Topic
Details
Evaluation Parameters Expected
Outcomes
1 ALL
STUDE
NTS
To
encoura
ge
students
to think
analytic
ally and
correlat
e
economi
c
concept
s with
real life
issues.
Each
group
will
be
allott
ed a
uniqu
e
topic.
Each
group
has
to
subm
it
write
up.
1. A combined written
report will be submitted
by the group members
on the topic allotted to
them and marks will be
given out of 30 on the
basic of peer rating done
by the students.
Evaluation will be done
on peer rating basis. All
the members will give
weight out of 10 to each
on the basis of amount
of work done. Teacher
will assign marks on
peer rating basis using
the rubrics. The
evaluation parameters
for this assignment are:
1.Introduction (topic
sentence) (5marks)
2.Sequencing (Organization)
(5marks)
3. Ideas, (5 marks)
4. links to other
readings/references (5
This
Academic
task has focus
on the
following:
1) Helpin
g
studen
ts
correla
te
conce
pts of
econo
mics
with
real
life
situati
ons.
2) Enabli
ng
studen
ts to
work
as a
team

marks)
5. Practical application and
relating concepts with real
world and conclusion (10
marks).
EVALUATION PARAMTERS FOR WRITE UP
CATEGOR
Y
1 2 3 4 5 Points awarded
Introductio
n (topic
sentence)
(5marks)
The
topic
sentence
is an
excellen
t
introduc
tion to
the
paragra
ph. It
tells the
main
idea and
gives
the big
picture
(5)
The
topic
sentence
is a
good
introduc
tion to
the
paragra
ph. It
may too
broad or
have a
detail
included
. (4)
Introdu
ces the
paragra
ph. It
does
not
introdu
ce the
topic
very
well
and it
include
s too
many
details.
(3)
The topic
sentence
does not
introduce
the
paragraph
.
(2)
Does not
display
an
understan
ding of
the topic.
Not in
line with
the topic.
(1)

Links to the
other
readings/
references
(5marks)
Student
makes
no
errors in
linking
or
refferin
g the
case (5)
Student
makes a
couple
of errors
in
linking
or
refferin
g the
case.(4)
Student
makes
several
errors
in
linking
or
refferin
g the
case
(3)
Student
makes
many
errors in
linking or
reffering
the case.
(2)
Student
makes
more than
ten errors
in linking
or
reffering
the case.
(1)
Ideas
(5 marks)
The
topic
has been
discusse
d from
different
angles
and
student
has
given
excellen
t grasp
of the
topic.
(5)
The
topic
has been
discusse
d
properly
and
student
has a
good
grasp of
the
subject.
(4)
Student
knows
the
subject
but not
related
it with
differe
nt
angles
(3)
Student
uses just
the facts
to relay
thoughts.
There is
not much
of the
student's
own
personalit
y in the
writing
(2)
Informati
on is
gathered
from
electronic
sources
but the
student
does not
know its
relevance
and
importan
ce (1)
Sequencing
(5 marks)
The
answer
is
The
answer
is in
The
answer
is
The
answer is
somewhat
The
content is
least

proper
sequenc
e and
does not
contain
any
theoreti
cal
errors
(5)
seqence
and
contains
very
few
theoreti
cal
errors
(4)
sequen
ce and
contain
s few
theoreti
cal
errors
(3)
in
sequence
with the
topic but
the
content is
not
convincin
g.(2)
sequence
d (1)
Practical
application
and relating
concepts
with Real
World and
Conclusion
(10 mark)
Student
makes
no
errors in
appropri
ate
practical
applicati
on and
Detailed
conclusi
ons are
reached
from the
facts
offered.
(10)
Student
makes
little
error to
relate
the
concept
s
practical
ly and
Clear
conclusi
on is
reached
from the
facts
offered.
(8)
Student
has
tried to
relate
the
concep
ts
practic
ally
and
Clear
conclus
ion is
reache
d from
the
facts
offered
. (6)
Student
makes
many
errors in
practical
applicatio
n and no
clear
conclusio
n can be
formed
from the
facts
offered.
(4)
Student
has not
related
with
practical
applicatio
ns and no
conclusio
n can be
formed.
(2)
TOTAL

INTRODUCTION:
Snapdeal is an Indian Ecommerce site which deals with different consumer goods like
clothes, electronic products, Personal Care products etc. The company was started by kunal
Bahl and Rohit Bansal in February 2010. It had 300,000 sellers, over 30 million Products
across 800+ diverse categories from over 125,000 regional, national and international brands
and retailers. They had a reach around 6000 towns and cities across India. Snapdeal has
received its first funding worth $12 million from Nexus Venture Partners and Indo-US
Venture Partners in January 2011. Then after big companies like eBay, Softbank Corp,
Alibaba invested around $500 million. Recently in May 2017, Snapdeal raised funding rs.113
crore funding from Nexus Venture Partners. Snapdeal has acquired several business
enterprises. Esportsbuy.com, Freecharge, Shopo.in etc. are acquired by Snapdeal.
Litereture review
Shrivstava and Mishra (2015), stated on his research the barriers of E-commerce while doing
research based on evolution of the E-commerce market in India. Some of the main barriers
he identified were unfavourable way of thinking of cunsumers, legal hassles, computer
illiteracy, privacy and Security fear.He also mentioned the main factors that trigger the
growth of the sector particularly the increase of internet usage and rapid increase of
smartphone usage.
The following authors anand vyas and Sachin Gupta (2017) made research to analyse the
challenge faced by an E-commerce in india. They stated that economy is the country is
increasing and E-commerce plays a major role. However, there is still many sectors that have
been untouched by E-commerce industry especially in rural areas. Many customers still
prefer traditional purchase method. Unfortunately, changing customer perception towards
online shopping has been quite a tough task for the industry. India ranked fourth position for
the number of internet users in the world. India is expected to be top ten E-commerce hub by
2020. The customers are afraid to use the new technology but the E-commerce companies
provide proper feedback and knowledge to its consumers for online purchase then it will
boost to increase theirs sales through online.the research gave theoretical contribution for
analyzing th eproblems in front of the E-commerce industry.
Sonnet et al (2014), researched Indian e-commerce the challenges and issues they face.The
issued discovered were impossibly pertaining to business to business(B2B) and business to

customers(B2C) segments particularly organizational matters, payment issues, privacy of
personal data and consumer protections and many more. According to the research, the main
key challenges encountered by the upcoming Indian market were return issues, low credit
card penetration, high failure rate of payment gateways, non-standardized postal addresses
and lack of rural logistics.
Deloitte India (2015), done an analysis on his research on the title “Future of e-commerce:
Uncovering innovation”, investigating thoroughly the cyber securityand taxation challenges
will face the E-commerce sector through its speedy evolvement over time. Some of the
recommendations to overcome such issues is to break down silos, incentivize openness and
collaboration, and to have a threat intelligence mechanism in place.
COMPANY PROFILE:
 The Company was established in the year 2010.
 Founder- Kunal Bahl & Rohit Bansal
 Snapdeal had 300,000 sellers over 30 million Products across 800+ diverse categories
from over 125,000 regional, national and international brands and retailers and a reach
of 6000 towns and cities across the country.
 Headquarter- New Delhi, India
 Investors- Softbank Corp, Alibaba Group, Ratan Tata.
 It also acquired Freecharge for 400 million.
 Top Competitors- Amazon, Flipkart
Marketing Strategy:
When launched, Snapdeal was first of its kind. When it was establishing its niche in the
industry, websites like mydala.com and DealsandYou came as its core competitor. But

working and focusing primarily on its goal, within 2 years, Snapdeal succeeded in making 8-
9 million user base. They entered in top 100 Indian websites in terms of traffic.
To further increase their members and traffic, they started referral programs on their websites
in which a user was paid a fixed amount for successful sign up of a friend after receiving the
referral link to use Snapdeal. Other than this, they started “Get your first deal free” offer
which got huge response from the user side. This led to the strong brand value of Snapdeal.
Side by side to these strategies, affiliate marketing campaign was also working. This
campaign was launched after 8-9 months of its inception. They started cost per lead (CPL)
campaign in which the affiliates were paid Rs. 30 for each lead generated. But the problem
was that the margin was very less related to cost per acquisition that was very high and the
average revenue generated on each transaction was approx. Rs. 50-100.
But Snapdeal knew how to remain in the market and for this they kept on promoting
themselves in any situation. After leads were generated, an aggressive email marketing
campaign was launched to reach out those leads. Every day on regular basis, promotional
emails were sent to the registered users.
But it was not the end. The names like Myntra and Flipkart were entering the market at the
same time. So to survive in the market, Snapdeal started to add more products listing into
their website. Soon Snapdeal ventured into a proper e-commerce site including categories
like electronics, fashion, kitchen appliances, apparels and many more. Finally in September
2011, Snapdeal turned into a marketplace.
MARKET SHARE OF SNAPDEAL & OTHER ECOMMERCE:
E-commerce in India is rapidly growing and there is intense competition. The three big
players Amazon, Flipkart and Snapdeal had been in different situations. In 2014, Snapdeal
enjoyed market share of 32% just behind Flipkart which had market share of 44% while
amazon had 15%. Flipkart was able to increase its market share from 44% to 45% while the
other companies their market share dropped(snapdeal dropped from 32% to 26% while
Amazon from 15% to 12%).

Amazon hugely invested different sectors to improve its market which then lead snapdeal to
lose its market. As of 2018, Snapdeal is not in the the list of top three, Paytm and Myntra are
a head of snapdeal. Amazon and flipkart are enjoying in the market with 31% and 32%
respectively. Combine of the market share of these two companies are 63% while all other E-
commerce companies enjoy only 37% combinely.
Flipkart
32%
Amazon
31%
Paytm
6%
Myntra
5%
Snapdeal
3%
Jabong
2%
others
22%
Market Share
FACTORS THAT LEAD FAILURE OF SNAPDEAL
Here, in this case study, we will get to know the mistakes made by Snapdeal, raising a valid
question of what is wrong with Indian start-up.
1. Lack of Quality Control
one of the event happened with Snapdeal where users were getting bricks and soaps instead
of phones. It hurt the image of Snapdeal back in 2014-15. The media was all over them and
caught this news well and it got spread like fire, so did Snapdeal’s brands.
2. No Unique identity
Snapdeal never had built any identity for them like Flipkart and amazon did for themselves.
Flipkart did with fashion and electronics & Amazon with Prime. Snapdeal was doing exactly
what its competitors was doing with no difference. Snapdeal’s tie-ups with Cleartrip, redbus,
for their respective services also failed to make any impact.

3. Late Entry into mobile payments
Snapdeal has acquired Freecharge- Mobile payments app a bit too late with no new
technology but at the same time Paytm’s wallet services have already done their way far
ahead. Paytm got huge market share for their innovative ideas and advanced techonology.
While the market today has full of payment wallets, Snapdeal’s failure to grow and best
utilize Freecharge’s platform has also not gone down well with industry experts and
investors.
4. Departure of senior-level executives
There have been several top-level exits in Snapdeal. In January, Senior Vice-president of
marketing Srinivas Murthy resigned. Followed by In May, Snapdeal lost Anand
Chandrasekaran, who was the brand’s Chief Product Officer. In June, the Business Head for
electronics, Saif Iqbal, left. Then Vijay Ghadge, Chief Operating Officer at Snapdeal’s in-
house logistics arm Vulcan Express Pvt Ltd, had quit barely four months after joining the
firm. The management-level exit was of Sandeep Komaravelly in January 2017. Snapdeal’s
Head of Corporate Development Abhishek Kumar had resigned in Feb 2017. Tony Navin,
Head of Partnerships and Strategic Investments, decided to quit after 7 years’ time.
Snapdeal’s struggles over the past few months are additionally due departure of a string of
senior-level executives.
5. Snapdeal was under fire with Aamir Khan Controversy
Snapdeal became an unlikely to hear for those who were criticizing actor Aamir Khan
(Snapdeal’s brand ambassador), for his undesirable views on the issue of intolerance in
India. As a protest against Aamir Khan, many customers took to social media to reveal that
they gave poor ratings to the Snapdeal app on app stores, and even majority started
uninstalling it from their smartphones.
E-commerce major tried to play safe by saying that, “It is neither connected nor plays a role
in comments made by Aamir Khan in his personal capacity. Here, the brand was not able to
understand users’ emotions and the take resulted in mass uninstallation of its app, online
shoppers rejecting it.

Many users began demanding that they won’t buy any product from the e-commerce portal
until Aamir Khan gets removed as the brand ambassador.
6. Drop in its valuation
Snapdeal’s losses more than doubled to INR 3,316 crore in fiscal 2015-2016, while its
revenue growth dropped. Snapdeal had posted a 150% increase in losses from INR 1,328
crore in the year ended March 31, 2015. Revenue grew by 56% to INR 1,457 crore from INR
933 crore in the same period
7. Struggle in Raising Funds
The company has struggled to raise fresh funds due to the intense competition with Amazon
and Flipkart. Venture capital firms and Nexus Venture Partners, both of which have
associates on Snapdeal’s board, are in a battle with Softbank Group Corp., which has two
board seats, over the company’s valuation in a potential sale.

The board allowed Snapdeal to keep spending, leading to a cash crunch. In July 2016,
Snapdeal, which had raised some $1.4 billion since October 2014, still had about $500
million left.
8. Snapchat- Confusion costs against Snapchat
After Snapchat’s CEO, Evan Spiegel was alleged of saying that he didn’t want to expand to
‘poor nations’ like India and Spain, people started to down rate Snapdeal instead of the
Snapchat app. Social media users are mistakenly downloading Snapdeal app, down rating its
services and intimidating to stop using it.
9. Missing Seller Arm
Snapdeal missed the seller arm like WSR is to Flipkart and Cloudtail is to Amazon.
This was much needed thing for Snapdeal to stay in the market. WSR and Cloudtail
played very important role in building up the customer trusts. Most of the top sellers
moved to Amazon or flipkart because of better working and better opportunity.
10. Neck-less Hiring
It was not just hiring but was mass hiring. Most of the hiring was done by different
medium like via references, no selection processes. Even Snapdeal were paying huge
amount to the employees as salaries.

11. Labour Issues
Snapdeal employees complained to the Labour Department in 2016, claiming that the
company was firing them and had forced 600 employees to resign in the last one year.
IDEAS:
They should follow the unique business model unlike Flipkart and amazon. Inventions can’t
work without a decent business model. In India, people need new and innovative things so
they should come up with new product segments like furniture. Again they should make their
base strong with a strong seller base from where they can give genuine products to customers
in fast delivery. They need to improve their customer services as well as tie up with big
brands. Snapdeal is now planning to restore its brand. They are started considering changing
the logo and redesigning it with a single colour.
Snapdeal which has been forcefully trying to rebuild its business had recently acquired
Gojavas to ramp up the delivery services. It also had launched the next day delivery services.
Snapdeal is also planning to spend huge amount in marketing this Diwali.
Apart from changing the logo, it also plans to introduce a new tagline to the brand. The new
tagline is most likely to hit the TV and Social Media.
CONCLUSION: To sustain in market innovation and new technology is needed.
Snapdeal was one of the ecommerce start-up which was really trying to be a leader in the
market, but failed due to some of the wrong decisions. To be remain in the market, they need
to improve their technology, services and make their own unique identity. They should focus
more on customer services, their products and get more and more genuine seller in their play.
They need to have a good and experienced people in its Board. They should improve their
marketing strategy like they should tie up with mobile companies and should have flash sale
in their website. In regular interval they need to check their customer’s demand and
implement those demands or ideas.
Reference