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By December, Snapdeal’s GMV will jump more than four times from about $2 billion now.
E-commerce company Snapdeal is aiming to surpass rival Flipkart’s gross merchandise value by the end of this year, said a senior in the company.
The Delhi-based five-year-old e-tailer is targeting $10 billion (about Rs 62,000 crore) in GMV.
Sources said last week the Bengaluru-based seven-year-old Flipkart planned to double GMV to $8 billion by December.
By December, Snapdeal’s GMV will jump more than four times from about $2 billion now.
“Electronics, one of the largest contributors to Snapdeal’s sales, is estimated to become a $5-billion business, followed by fashion at $2 billion.
The remaining will come from other categories put together,” said the executive.
GMV in e-commerce means total sales value of the merchandise sold through the marketplace in a period.
Most e-commerce companies refrain from sharing their revenues, owing to which the GMV run rate is often used to gauge their financial health.
Revenues are a small proportion of GMV.
While Flipkart targets to ship a billion units a month and serve 100 million customers by 2018, Snapdeal is focusing more on its 40 million connected users, 70 per cent of which come from tier-II cities.
Industry sources said Amazon India’s GMV was about $1 billion.
“Focus on tier-II cities, rather than just metros, worked for Snapdeal very well. In tier-II cities, e-commerce is a ‘need to have’, while for the tier-I and metro cities, it is ‘nice to have’,” said the executive.
Flipkart, the poster boy of Indian e-commerce, has been on a fund-raising spree in the past year, with its total cash infusion at about $2 billion.
In the same period, Kunal Bahl-led Snapdeal has decided to stay conservative, raising about $1 billion, most of which came from Japan’s SoftBank ($627 million).
While Flipkart is reportedly going for its next round of funding, Bahl’s Snapdeal, the executive claimed, was “comfortably” funded till the time when it would turn cash-positive.
“Well, there may be fresh funding if the company decides to go for more strategic partnerships.
"However, the company is yet to zero in on a timeframe for turning it into operating cash-positive,” pointed out the executive.
Snapdeal founders have preferred funding from strategic investors even at lower valuations, rather than from financial investors offering much higher valuations, said the executive.
Indian e-commerce sector is in a hyper-growth mode, mainly because of fast-growing numbers of smartphone users with internet access in the past year.
On the other hand, 2014 was a major breakthrough for a handful of e-tailers, with investors infusing fresh cash at higher valuations.
Consulting firm Technopak estimates Indian e-tailing will be worth $32 billion by 2020, more than 10 times its value of $2.3 billion in October last year.
E-TAILER TUSSLE
Disclaimer: Rediff.com also has an e-commerce business which competes in some areas with Snapdeal, Flipkart.
