Indian company Snapdeal to invest in logistics to speed up deliveries

By Himanek Sharma

MUMBAI (Reuters) – Indian online marketplace Snapdeal, backed by Japan’s SoftBank Group Corp and others, will spend more on logistics and technology to better compete with Flipkart and Amazon’s Indian unit, its co-founder said on Monday.

Online shopping is becoming increasingly popular in India due to the increasing use of cheaper smartphones, and e-commerce companies are struggling to meet growing demand and speed up deliveries in various parts of the country.

India’s e-commerce market is expected to grow to $220 billion in value of goods sold by 2025, up from an expected $11 billion this year, Bank of America Merrill Lynch said in a recent report.

In addition to the $500 million in August funding round led by China’s Alibaba, SoftBank and Foxconn, Snapdeal is now planning to expand its services.

One area Snapdeal will focus on will be reducing delivery times by investing in better data analytics and demand forecasting, co-founder Rohit Bansal told Reuters.

“We’ve made over 10 acquisitions and investments in the last year, almost all in technology, supply chain and payments,” he said. “With all of those investments, we’ve been able to reduce our delivery times by 70 percent in the last year.”

Fast and cheap delivery is important to attract customers in a competitive industry where companies spend significant amounts of money to grow.

Snapdeal, which had $4.5 billion in gross merchandise volume (GMV) by August, a measure of the value of goods and services sold, bought mobile wallet company FreeCharge in April for about $400 million.

It also spent about $35 million to buy a roughly 50 percent stake in logistics services company GoJavas.

Bansal said Snapdeal received interest on a portion of its stake in FreeCharge to raise funds for the mobile wallet company, but declined to comment further.

In October, the Economic Times reported that FreeCharge planned to raise $300 million so that the mobile wallet could expand its product offering after receiving a specialist payments bank license from the country’s central bank.

“Our view is that five years from today, 10 per cent of Indian consumption, not just of products but of all consumption, will be online and we want to build a technology ecosystem for this,” Bansal said.

(Reporting by Himank Sharma; Editing by Sumeet Chatterjee and Louise Heavens)