Snapdeal Bets Big on Small Towns, Will Offer Assisted E-Commerce

E-commerce major Snapdeal, which nets over 70 percent of sales from small towns, is betting big on rural markets and is actively assessing opportunities of partnerships for assisted e-commerce in remote areas.

"Rural markets offer a huge untapped potential and we are assessing the opportunities of tie-ups for assisted e-commerce in rural areas very seriously. We also expect a majority of our new customers to come from hinterlands," co-founder and chief executive Kunal Bahl said on Tuesday.

"As an e-commerce platform we can solve a real need in rural area as there is a lot of aspiration in rural markets. Over 70 percent of our sales come from Tier II cities and below now," he added.

Last year, Snapdeal had started a pilot programme with the help of financial inclusion solutions company Fino PayTech to launch around 5,000 e-commerce kiosks across 65 cities and 70,000 rural areas within a targeted timeline of end 2015.

The business model for rural markets is assisted e-commerce, and "not necessarily delivering to customers' houses directly," he said, adding supply chains are still being big issues in smaller towns.

Assisted e-commerce is where person comes to a kiosk, places an order and picks it up.

While the marketplace offers same-day and next-day delivery services, Bahl said the uptake is largely an urban phenomenon.

"In the smaller towns and cities, people just want the product. They don't get access to products that are genuine, reliable and at the right price," he added.

The company has set itself an ambitious target of getting over 1 million sellers on board its platform over the next three years to meet its aggressive sales targets.

Snapdeal on Tuesday tied up with Sidbi to offer easy and cost efficient financing to its sellers.

"Our sellers don't have a demand constraint. They're supply constrained as they don't have cheap working capital available to them," he said.

Bahl observed that typically, a seller saw a two to three times increase in sales during a 60 day period after their loan has been granted.

"Through our various partnerships, we have lent over Rs. 100 crores to our sellers through our capital assist programme so far," he added.

Meanwhile, reacting to Kumar Mangalam Birla's doubt over sustainability of e-commerce, he said every new business takes time to mature, during which multiple questions are raised and said people had doubt on mobile telecom 15 years ago but have been silenced today.

"Within ten years, the benefits of e-commerce will be visible to all and all doubts would be put to rest," he exuded confidence.