For Snapdeal, D-Mart IPO serves as inspiration

Snapdeal’s Kunal Bahl tells team to follow D-Mart example. Sources close to the company says Snapdeal plans to launch an IPO by 2019.

The successful initial public offering of D-Mart has managed to inspire one of the biggest marketplaces in the country, which is in dire need of a morale boost.
 
After months of trials, tribulations and criticism, an upbeat Kunal Bahl, co-founder of the Gurgaon-based online marketplace Snapdeal, told his employees in a mail the company should follow the example of the hypermarket chain.
 
The co-founder of the third largest marketplace not only met people associated with D-Mart, but also went to one of the stores to understand the reasons behind the blockbuster IPO launch.
 
While not saying it in as many words, Bahl indicated that Snapdeal might also take the IPO route.
 
According to sources close to the company, Snapdeal plans to launch an IPO by 2019. Bahl also indicated that while investors’ perceptions might change, a company can launch a blockbuster IPO if it stuck to the plan and focused on the core audience.
 
The company has managed to cut down its costs by 60 per cent, he said in the mail. The latest email was more optimistic than his previous one to employees where he had admitted to making mistakes. Bahl said they were 'on the path to profitability'.
 
'Many of you would have seen the wildly successful IPO of D-Mart. It is incredible the clarity of thought the company has and the focus it has on efficiency and profitability.

'While investors in the ecosystem may keep changing their point of view on what ecommerce companies should do -- from conserving cash at times to driving top line growth at other times -- it is clear from the D-Mart story that having a consistent strategy, building thoughtfully and for the long term creates an incredible outcome', Bahl said in the mail.
 
Over the past week, Bahl said, he met people who have been either closely watching the company or have been associated with it and has learnt a few things. Bahl said the two main takeaways from D-Mart were focus on unit-level profitability and core audience.

He said, 'While many other retailers were growing stores rapidly, D-Mart was ensuring that each store is profitable so that their growth is sustainable and well thought through. In their business, too, like ours, I’m sure there would have been differing voices in 2005-10 on whether rapid expansion of stores and top line is the right strategy or focusing on unit economics. Clearly, in spite of the external pressure they may have faced, they stuck to their principles and the results are phenomenal', he said.
 
Snapdeal -- which in the past one year has let go of more than a third of its workforce to cut costs so that it could reach profitability faster -- was going for another 'pivot' in its business to concentrate more on customers, said sources. It would be the fourth pivot or change in business plans the company has taken in its lifetime.
 
Sources said the company would take a targeted approach and concentrate on a core set of audience instead of trying to grow in multiple directions.