On Tuesday, eBay said it was going into a commercial partnership with Snapdeal, an Indian online shopping platform set up in 2010, as well as investing in the company.
Kunal Bahl, who co-founded Snapdeal, describes it as a “marketing platform”. Unlike eBay, the website takes listings from businesses and not individuals. It currently has just over 1m items on its website but hopes to reach 20m in the next couple of years, forecasting revenues of Rs20bn ($350m) for the current fiscal year.
The two companies won’t disclose how large eBay’s investment is but they said in a statement:
The partnership seeks to drive more consumer demand for eBay and Snapdeal merchants along with wider selection for India consumers in a rapidly growing market.
“The collaboration is on joint marketing to user bases so respective sellers have access to a greater user base and consumers have a greater selection,” Bahl explains.
So, why is eBay pairing up with this local player? It’s wholly-owned subsidiary in India sells, on average, one mobile accessory every minute, a mobile handset every two minutes, and a piece of jewellery every 3 minutes. Sounds like their cashier’s ringing as it is.
But consider the coverage of the two companies. Snapdeal has over 18m registered users and 50,000 merchants, working across 4,000 Indian towns and cities and shipping over 25,000 units a day. Compare that with eBay India, which has just 5m registered users in 4,306 towns and cities.
Bahl puts it differently. He says that with so many registered users who give Snapdeal permission to market to them, the company has access to a fifth of India’s internet users. So if it were a newspaper, Snapdeal would be India’s largest digital rag. Ebay could do with that sort of reach in a foreign environment.
He adds that Snapdeal has built a lot of technology to develop its supply chain and plans to roll this out to other ecommerce companies. For instance, its SafeShip technology aggregates information from different courier companies to allow sellers to find a local service with minimum effort. Another innovation, TrustPay, gives buyers security by holding their payment with Snapdeal for seven days after a purchase is made before remitting it to the seller, giving them time to change their minds and return unwanted items.
And it’s generally good for an international brand to have a local partner. Arun Sirdeshmukh, former chief executive of Reliance Trends who has since founded Fashionara, an online shop for apparel and footwear,says a global name doesn’t necessarily have a head start: “Indian consumers have never shied away from local players. They coexist. We are in that sense agnostic… Some international businesses don’t do too well and exit or have to change their business model.”
For Snapdeal, association with eBay is, of course, testament to its success. And Bahl says the company is currently using investments to increase variety and to build technology and brand image as it tries to draw in new customers.
Snapdeal’s co-founder flags up an interesting figure on retail in India: the retail market is worth $600m but only 0.2 per cent of that is ecommerce, compared with 9 per cent of retail in the US and 6 per cent in China. There’s potential here that international companies will definitely be interested in.
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