E-commerce company Snapdeal will enter the music, movies and books segment — one of the most lucrative segments for online retailing — next quarter.
It will also add 500 people to its 1,500-strong team by the end of 2012, Mr Kunal Bahl, CEO of the company said. Snapdeal already has over 60 graduates from IITs and IIMs on its rolls and plans to hire more from these institutes, he added.
Revenue target
Snapdeal is targeting revenues of Rs 500 crore this year and expects to earn 15 per cent of its revenues from the music, movies and books segment next quarter, Mr Bahl said.
While movies and books offer high demand, Snapdeal hadn’t ventured into it earlier because it requires a strong supply chain backend and the business tends to lose lot of money, Mr Bahl said.
Snapdeal wanted to build a strong business model before entering the media and books space, he added. Mr Bahl pointed out that while demand wasn’t as good in other segments, supply chain was easier to handle and this helped Snapdeal build a strong base.
The music, movies and books business contributes about 35 per cent to the overall online retail industry in India, according to Mr Ankur Bisen, Associate Vice-President Retail and Consumer Products, at a management consulting firm, Technopak Advisors.
“Customers see a lot of value on buying these products online as they get a huge spread of choices online compared to offline stores,” said Mr Bisen . No store can stock and offer the volumes and variety that an online portal can, he said. India’s largest online retailer Flipkart made its success through this category, he pointed out.
Competition
The segment has multiple players today, but competition “doesn’t bother us,” Mr Bahl said. Snapdeal is amongst the largest online retailers with over 16 million registered users, “which means that every one in six Internet users in India is Snapdeal’s customer,” Mr Bahl pointed out.
He believes that Snapdeal’s business model of retailing both products discounted deal coupons helps retain customers.
The two-year-old company started off selling deals and coupons on products and services, and entered product retailing about eight months back. Snapdeal has raised over Rs 250 crore of funding from Nexus Venture Partners, IndoUS Venture Partners and Bessemer Venture Partners.