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Snapdeal, India's largest online marketplace, is betting big on TrustPay, its new payment system. With this, the company is not just ensuring consumer satisfaction; it is also seeking to generate revenues by letting competitors use the payment platform, developed indigenously by the company.
Earlier, the company was in the news for concluding a fresh round of funding. Its business model is being followed by many e-commerce companies, including Flipkart.
Snapdeal Chief Executive Officer Kunal Bahl terms the company the "Taobao of India". And, not without reason. Clearly, Snapdeal is emulating many of Taobao's features, including offering its payment protection technology to other e-commerce companies. Taobao is understood to be the most valuable asset of Alibaba, the Chinese online retail firm, which accounts for Amazon and eBay together.
"Just like Taobao's payment system is offered to non-Taobao sites, we may also allow the use of TrustPay to others," says Bahl.
Payment protection is one of Snapdeal's pillars, he adds. "To conclude any transaction, you have to confirm you are happy with the products you have bought from the site. Otherwise, the buyer gets the money back, without any question asked," he says, explaining TrustPay. For this payment system, the company has filed for intellectual property protection.
Snapdeal also offers features such as a logistics platform through which suppliers can track and manage the movement of products. It is investing in mobile commerce, too, as at least 15 per cent of its sales are accounted for by mobile device transactions, against five per cent a year ago. In about two years, this is expected to rise to 30 per cent. "We are a technology company, not an e-commerce company," says Bahl, adding the company has a tech team of 150 people, 100 of whom are graduates from the Indian Institutes of Technology.
In terms of categories, the company is gung-ho on online automobile sales; so far, sales were limited to two-wheelers. "Many car companies have reached out to us, as they want to use the online platform as an additional sales channel," Bahl said.
At a time when many online retail companies following the inventory-led model are struggling to find investors, Bahl says, "We don't need an insane amount of money." The company is eyeing sales worth Rs 2,000 crore in 2013-14. In 2012-13, it recorded 400 per cent growth, at an estimated revenue of Rs 750 crore. It maintains for 2015, it is targeting sales of $1 billion (Rs 5,000 crore).
While Alibaba would go public next year at an expected valuation of $100 billion at the time of listing, Snapdeal is in no hurry to be listed.
"The company wants to become more valuable and then go public," says its chief executive.
The road ahead for Snapdeal, however, isn't free of hurdles. Listing the downside of the marketplace model Snapdeal follows, Bahl says ensuring the quality of products could be a challenge, as the marketplace company doesn't own these. Integration of brands and ensuring adequate stocks are among the other problems a marketplace company might face.
