SERVICE FAILURE OF SNAPDEAL

Submitted in fulfilment of Semester II, Mid Term Assignment

Services Marketing & Services Design & Relationship Marketing

Submitted By

Anjali Kumari
Anupama Ranjana
Chitra Kumari
Dipika
Shelley Gupta

Under the guidance of

Dr. Rishikesh Kumar

Associate Professor

Department of Fashion Management Studies

National Institute of Fashion Technology, Patna

Mithapur Farms Area
Patna, PIN - 800001
Ph. 91 612 2340032, Fax: 2360078
Web: www.nift.ac.in
March, 2022

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 ACKNOWLEDGEMENT

Inspiration, motivation and hard work plays a key role in succeeding any venture. If words
are considered as gesture of approval and token of appreciation, then let words play heralding
role in expressing our gratitude.

We would like to express our sincere gratitude to our Omni Channel Retail and Sales
Management Professor Mr. Rajesh Chaudhary for giving us this assignment and for his
continuous supervision and constant suggestions given to us throughout the project that has
shaped the present work as it shows. We could not have thought of having a better advisor
and mentor for this subject.

We would like to thank NIFT Patna, for providing us the opportunity to work in such a
respected organization. Through this we did lot of research and came to know about so many
new things.

We are really grateful because we managed time to complete our assignment within the time
given by our ma’am. This assignment cannot be completed without the effort and cooperation
from our group members. Without them it could not be possible.

At last, we would say it was a great pleasure for us to undertake this Research project and
successfully complete it on time.

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 TABLE OF CONTENTS

1. INTRODUCTION................................................................................................................1

1.2 Vision & Mission.............................................................................................................1

1.3 Snapdeal’s Target Market.............................................................................................2

2. CAUSES OF SERVICE FAILURE OF SNAPDEAL.......................................................3

3. SUGGESTIVE MEASURES.............................................................................................10

4.CONCLUSION...................................................................................................................12

5. REFERENCE.....................................................................................................................13

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1. INTRODUCTION

Snapdeal is an Indian e-commerce company, based in New Delhi, India. The company was
founded in February 2010 by Kunal Bahl and Rohit Bansal, alumni of The Wharton School
and Indian Institute of Technology Delhi respectively. Snapdeal was founded on 4 February
2010 as a daily deal platform, and expanded in September 2011 to become an online
marketplace. Sellers on Snapdeal offer good quality (local / regional / seller branded)
merchandise, that offers customers value-for-money options, similar to what would sell in
local markets and high streets in a city. Snapdeal brings together a wide assortment of good
quality and value- priced merchandise on its platform. With majority of the value-seeking,
middle-income, price-conscious buyers coming from the non-metros, Snapdeal’s logistics
networks powered by third party logistics cover more than 96% of India’s pin codes enabling
order deliveries to more than 2500 towns and cities and expanding.

When the founders, Kunal Bahl and Rohit Bansal, intended to launch their company in 2010,
they came up with Money Saver, an offline couponing service. This company sold around
15000 vouchers in three months, indicating that it was time to take the business to the next
level. As a result, on February 4, 2010, Snapdeal was founded.

When it first launched, it was essentially a daily deal platform, but it eventually grew to
become an online marketplace in 2011. Snapdeal has since evolved to become one of India's
leading online marketplaces.

1.2 Vision & Mission

Snapdeal's vision is to enable the shoppers of Bharat experience the joy of living their
aspirations through reliable, value-for-money shopping. With a personalized, multilingual
interface and cutting- edge technology, Snapdeal has simplified the shopping experience for
its value-conscious buyers by showcasing the most relevant products- products that are a
good functional fit with their needs and of a quality that lasts- thereby delivering true value to
its customers. With its commitment to high service standards, Snapdeal suppliers operate

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under a well -structured ecosystem that enables them to offer great quality products at
affordable prices.

MISSION

Snapdeal's mission is to become India’s value lifestyle omni-channel leader. We are excited
about continuing to build a complete ecosystem around value commerce, where we can serve
'Bharat' consumers wherever they are on their offline to online shopping journey.

1.3 Snapdeal’s Target Market

Tier 2, tier 3, and beyond account for a major portion of the company's target demographic.
Furthermore, many of them have high aspirations but limited disposable incomes.

Its television commercials utilised broad appeal TV personalities emphasising savings -

'Snapdeal par bachatey raho,' for example (keep saving on Snapdeal). This is clearly aimed at
India's online yet price-conscious middle class, which was predicted to expand from 160
million users to 267 million by 2015. Tier 2 and tier 3 cities were projected to account for a
large amount of this increase. Snapdeal was concentrating its efforts on this very segment

Customers must not have Rs10,000 left over after meeting basic expenses at the end of the
month to buy a pair of shoes. They do, however, shop frequently, primarily at local stores.

'Our goal is to provide the same collection online, which consumers could travel to local
marketplaces for," he said, adding that the majority of the products on the platform are priced
between Rs. 250 and Rs. 2000. Rajnish Wahi, SVP of Snapdeal's communication and
corporate affairs, had quoted.

Snapdeal reinvented itself as a value platform as part of its new strategy. We are
primarily concerned with offering individuals with high-quality, value for money
products. Many of our consumers are motivated by aspiration and a sense of
exclusion.

The brand hopes that their 'budget positioning' will distinguish them from the
competitors.

In an interview with the Economic Times in August 2016, Snapdeal's founder and CEO,
Kunal Bahl, stated that the company will attain the number one position in terms of sales till
March 2016; at the time, Snapdeal was ranked second. Snapdeal's market share, on the other

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hand, fell dramatically from 25% to 4% in March 2017. Snapdeal, which was predicted to be
valued at $6.5 billion in 2017, was valued at just $1 billion in 2017.

2. CAUSES OF SERVICE FAILURE OF SNAPDEAL

Execution error

Snapdeal, like many others in the business, began making mistakes in the last two to three
years as more investment entered the market, according to the founders.

An imitator in Business

One major issue with Indian startups is that very few are actual innovators, with the majority
being copycats. The strategy entails taking a successful model from the United States or
Europe and replicating it in India. They end up investing a huge sum of money in these
business ideas.

Because China is a secure market, this copying strategy works extremely effectively. Foreign
players are prohibited in the country, and the economy is well aware of how to find
substitutes.

However, India is a free country, and companies like Amazon, eBay, and Uber are welcome
to come in and compete. As a result, a simple imitation tactic isn't expected to last long.

Some Decisions Proved Costly

The brand is the result of an 'exorbitant' rebranding process that cost the company INR 200
crores. At a time when the brand was already depleted, it attempted to appear extravagant by
spending a ridiculous amount of money. They spent a lot of money to make noise in a
crowded market.

Late entry into mobile payments

With FreeCharge Wallet, Snapdeal entered the mobile payments market a little too late.
Paytm's wallet services have already blazed a trail for others to follow.

While there are several payment wallets on the market today, Snapdeal's failure to develop
and fully utilize FreeCharge's platform has irritated industry analysts and investors.

Departure of Senior-level executives

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In 2016, there were several high-level departures. Srinivas Murthy, Senior Vice-President of
Marketing, resigned in January. Snapdeal's coveted Silicon Valley employee, Anand
Chandrasekaran, who was the brand's Chief Product Officer, left the company in May. Saif
Iqbal, the Business Head for Electronics, left in June.

Vijay Ghadge, the Chief Operating Officer of Snapdeal's in-house logistics business Vulcan
Express Pvt Ltd, resigned just four months after joining the company in November 2016.

Sandeep Komaravelly, a senior executive, resigned in January 2017. He was the Senior Vice
President in charge of Snapdeal's 'Shop' zero-commission marketplace. Abhishek Kumar,
Snapdeal's Head of Corporate Development, resigned in February 2017. After 7 years, Tony
Navin, the Head of Partnerships and Strategic Investments, chose to retire.

Snapdeal's problems in recent months have also been exacerbated by the departure of several
senior executives.

Drop in its Valuation

In fiscal 2015-2016, Snapdeal's losses more than doubled to INR 3,316 crore, as sales growth
slowed. Snapdeal's losses increased by 150 percent to INR 1,328 crore in the fiscal year
ending March 31, 2015.

According to data, revenue increased by 56 percent to INR 1,457 crore from INR 933 crore
during the same period.

Lack of vision

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Snapdeal's demise was caused by a lack of foresight on its part. Snapdeal was intended to be
an e-commerce company, followed by a platform of apps similar to Facebook. Facebook
became the largest social media firm after acquiring WhatsApp and Instagram. They began
buying companies once the founders wanted to turn it into an ecosystem rather than an e-
commerce business. Flipkart was successful in acquiring Jabong and Myntra and integrating
them as planned, however Snapdeal failed to do so. Snapdeal paid $400 million for
Freecharge, but after demonetization, when Paytm became highly popular, Snapdeal was
unable to do anything with the service ‘Freecharge’

Snapdeal then bought Exclusively, a high-end apparel brand, but failed to operate it correctly
and had to shut it as well. Snapdeal bought a number of startups, including Shapo,
Wishpicker, ESportsbuy, Grabbon, and others, but failed to integrate them properly each
time. Snapdeal was never able to manage other firms since it was not lucrative. It was all
about everything except the consumer experience.

No golden touch

Following the advent of Amazon Prime, which costs Rs 499 per year, Snapdeal also
launched, ‘Snapdeal Gold’—a free service that requires no registration—was launched.
This deal entitles the buyer to free next-day delivery in specific locations, as well as
standard free delivery everywhere else. In addition, instead of the typical seven days,
returns can be done in 14 days. This promotion does not apply to orders placed with cash-
on-delivery.

However, alas! Customers desired more than simply rapid delivery; they wanted a better
experience. Snapdeal states that this service was extensively promoted in the aftermath of
demonetisation, and at that point of time it accounted for more than 20% of all orders
placed on the site. When compared to Amazon Prime, though, that metric does not appear
so well. Despite being a premium service, Amazon boasts that Prime subscribers account
for one out of every three orders done on its site. 

Multilingual tragedy

At the time of its inception, the vernacular app was praised. Rural India, on the other hand,
was either not ready for e-commerce or vernacular was not the most efficient approach to

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reach the masses. Those people know how to transact - they figure it out even if the app
doesn't include the regional language. With 14 regional languages in the programme, there
was no need to appeal to a large number of users. Furthermore, for such an attempt to
work, the regional audience must be significantly greater.

Customer experience, not language, was the most significant obstacle to e-commerce.

Language was never the most difficult problem to address when it came to expanding the
e-commerce client base. The whole shopping experience, from the user interface to the
items and delivery, must be tailored to the demands of this group.

Struggle in raising funds

Due to the fierce competition from Amazon and Flipkart, the company has struggled to
attract new funding.

SoftBank Group Corp., which has two board seats, and venture capital firms Kalaari Capital
and Nexus Venture Partners, both of which have associates on Snapdeal's board, are fighting
over the company's worth in a potential sale.

Snapdeal was allowed to keep spending by the board, resulting in a cash problem.

After launching INR 200 crore initiatives to change its image in July 2016, Snapdeal, which
had raised $1.4 billion since October 2014, still had roughly $500 million left.

At the same time, Discount & Marketing turned down at least two financial offers due to
board disagreements.

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Lack of democracy

It's not the money or the brand that motivates your employees to work hard; it's the
culture. However, sources claim that this was not the case with Snapdeal. "Kunal Bahl and
Rohit Bansal, the co-founders, never permitted outsiders to participate in decisions or
shareholdings. "The autocratic structure within Snapdeal caused several top officials to
leave—even those with five years of experience there," a former senior employee adds on
the condition of anonymity.

Snapdeal mass lay-offs (Cost-cutting measures)

With a '100% wage cut,' Snapdeal lay off 500-600 people across its e-commerce marketplace,
businesses, mobile wallet Freecharge, and shipping division Vulcan Express.

Snapdeal recently shut down its consumer-to-consumer marketplace 'Shop,' as well as its
expedited delivery service SD Instant. Beauty and fast-moving consumer goods (FMCG)
have also been phased out.

"With all the capital streaming into this market, our whole industry, including ourselves,
started making mistakes," Snapdeal founder Kunal Bahl stated in an email. We started
growing our company long before we figured out the correct economic model and market
fit."

"We also began diversifying and launching additional initiatives, even though we had yet to
perfect the first or make it viable." We began expanding our staff and competencies in
preparation for a far higher scale of the company than was required at the time."

"Unfortunately, some of our colleagues will be saying truly hard goodbyes as a result of this
process," he said, without specifying the number of layoffs.

Snapdeal has been chastised for its lack of profit focus, excessive advertising and rebranding
spending, and over-hiring as a result of the founders' email.

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Snapchat- Confusion costs against Snapchat

Following reports that Snapchat's CEO, Evan Spiegel, said he didn't want to grow to 'poor
nations like India and Spain, people began to criticize Snapdeal rather than the Snapchat app.

It caused a boycott of 'Snapchat,' but the Indian e-commerce portal 'Snapdeal' was caught off
guard by the tempest. Users on social media are installing the Snapdeal app in error, rating it
poorly, and threatening to uninstall it.

“We are getting non-stop calls since Sunday evening. I have never seen this kind of social
media outburst for wrong news,” said an official from Snapdeal.

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Snapdeal was under fire with Amir Khan Controversy

Snapdeal became an unusual target for those who chastised actor Aamir Khan (Snapdeal's
brand ambassador) for his dismissive remarks on India's intolerance problem. As a form of
protest against Aamir Khan, numerous consumers resorted to social media to report that they
had given the Snapdeal app low ratings on app stores and that the majority of them had begun
removing it from their cell Phones.

"It is neither connected nor plays a role in comments made by Aamir Khan in his capacity,"
the e-commerce behemoth said.

The business was unable to comprehend consumers' feelings, and as a result, the app was
widely uninstalled, with online shoppers rejecting it. Finally, Snapdeal dropped the contract
after failing to include Amir Khan in its 'Dil ki Deal' advertisement.

Many customers demanded that Aamir Khan be removed as the brand ambassador and that
they not buy anything from the e-commerce portal until he is.

No unique identity

The business was never able to develop its distinct personality. It was founded in 2010 by
Kunal Behl and Rohit Bansal. It used to be a popular daily deal platform, but in 2011 it was
transformed into an e-commerce site. It lost its uniqueness when it began to do the same work

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as Flipkart and Amazon. "You should learn from your competition but never replicate them,"
stated Alibaba Group founder and billionaire Jack Ma. "Copy and you will perish."

Unlike Flipkart, which specialized in fashion and electronics, and Amazon, which focused on
prime and grocery, Snapdeal lacked a unique selling proposition. Exclusive partnerships were
formed between Amazon and Flipkart and smartphone manufacturers Xiaomi and Oneplus.
Snapdeal has never been able to form such large alliances. Snapdeal Gold, which included
complimentary services such as home delivery and a 14-day return period, failed to increase
sales. On the other hand, Amazon Prime's paid service drew a lot of attention since customers
desired both the speedy delivery and good customer support. Snapdeal was unable to set itself
apart from its competition.

3. SUGGESTIVE MEASURES

Focus on the goals

The first thing that must be established in every business is the overall goal. Snapdeal's
objective in this scenario should be to grow revenue. It should target underserved markets
and begin with a lean business approach. A startup should not only imitate, but rather
innovate. It should be founded on uniqueness. It should also function in accordance with its
vision, and last, a company should aim to become profitable as soon as possible.

Workplace culture and professional ethics are crucial

Employees are highly linked on the ecommerce platform; they are all aware of the company's
quantitative and qualitative vision and strive toward it. A well-coordinated company with
happy employees may aid in business growth. They should have stabilized the culture and
made sure that everyone on the team would be on the same page with the company's goals.
Rather than employing people based on their educational background, companies should
choose people based on their skill and knowledge. They should set up various forums for
rewarding and recognising team members who perform well and achieve their objectives.

In-depth market research will provide insight

Snapdeal should be aware of its competition, shifting industry dynamics, internet explosion,
and rapid digitalization. The company should deliver seamless user experiences, cost-
effective high-quality items, and convenient payment alternatives.

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Focusing on price-conscious consumers

The company should have targeted consumers who are seeking low-cost products and prefer
high-quality products that may or may not be branded, even if they are not browsing, they
may play games and win coupons. In this manner, the organization should be able to establish
a strong relationship with their customer base.

Instead of focusing on several product categories, they should develop a unique selling
proposition for a single category and use it to generate revenue.

If they had focused on small business seller partners from small towns and cities on their
platform, they may have grown their business.

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 4.CONCLUSION
When the going gets tough, the tough get going, as the saying goes. However, this Unicorn
has lost its zeal and is no longer able to charge forward—too many efforts and a lack of
follow-through have led to its demise. Snapdeal, despite numerous innovative ideas and
services, was unable to develop a product that customers could not live without.

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5. REFERENCE

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