Wednesday 7 January 2015

Flush with Wall Street funding, Snapdeal and Myntra kick off 2015 with big sales

Flush with new rounds of investor funding, e-commerce companies, Snapdeal and Myntra, have kicked off their first sales of 2015, as they look to grab a larger slice of the Indian consumers' wallets.
Snapdeal, which is the country's largest online marketplace, kicked off its "End of Season Sale" last week, with the company already claiming to see a 150% jump in sales, compared to its overall GMV figures in the last week of December.
"We expect to touch lives of about 5 million shoppers during winter EOSS 2015 from 8,000 cities and towns across India with more than 20,000 sellers participating in the sale," said Amit Maheshwari, vice-president, Fashion at Snapdeal, in an email statement to ET.
Company representatives, while refusing to disclose the average daily sales it records during non-sales periods, however confirmed that Snapdeal expects to cross $1 billion in GMV from its fashion and apparel category alone, by the end of the current fiscal.
"There has been a massive movement of shoppers from offline market to online market and overall figures for EOSS 2015 are expected to sky rise as compared to previous years," Maheshwari said.
In October, Snapdeal claimed to have sold goods worth Rs 600 crore during its Diwali sales
The Delhi-based e-commerce company is not alone in its endeavour to stamp its presence among India's growing digital population.
Fashion e-tailer Myntra, too, held its "End of Reason" sale that closed on January 4, as it attempts to hit the $1 billion (Rs 6,000 crore) in gross merchandise value mark in the coming fifteen months, a three-fold growth.
Questions, however, continue to be asked of the country's e-commerce firms of their ability to handle large order volumes, their technology infrastructure and backend systems.
In June last year, Flipkart's much-hyped Big Billion discount sale was marred by technical glitches and recriminations from swarms of buyers angry and disappointed with pricing and availability of products.
"Most of our shipments 80% take less than 3 days. Service is becoming hygiene," said Ganesh Subramanian, chief operating officer, Myntra, adding, "About 70% of Myntra's deliveries are handled in-house."
In order to hedge customer traffic and prevent technical glitches, the Bengaluru-based company allowed only a limited number of users on its website at each time, which led to the delay.
"Our store is full of shoppers and our systems are operating at maximum capacity. We are trying our best to sneak you in. Please check back in a few minutes to shop at India's biggest fashion sale!" Myntra's web page said when a customer tried to access the website.
Needless to say, irate consumers soon took to social media to air their grievances, complaining about a 30 minute delay in login, order summaries not being acknowledged by the website after payment for at least a couple of hours.
However, the deep discount sales will continue for the foreseeable future as India's three major e-commerce companies - Bengaluru-based Flipkart, Snapdeal and Amazon - duke it out for top honours in an industry that is expected to touch $23 billion, according to a Nomura report, by 2019.
While Snapdeal raised $627 million from Japanese media, telecom and internet giant SoftBank in October last year, Flipkart, which owns and operates Myntra, raised a whopping $700 million from investors in December.
The online e-tailers could, reportedly, end up spending up to $1 billion on discounting products and marketing, as they try and out manoeuvre each other in a high-stakes game.
Snapdeal, which saw a 5X rise in revenue to Rs 168.1 crore for the financial year ending March 2014, however, saw its losses widen to Rs 264.6 crore over the same period, compared to FY 2012-13, according to documents filed with the Registrar of Companies.
Correspondingly, Myntra, which was bought by Flipkart in May 2013 for an estimated $370 million, reported revenue of Rs 441 crore, but saw losses shoot up to Rs 173 crore in the same period, compared to the year ago fiscal.

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