Daily deals is not an easy business: Kunal Bahl

By Kapil Ohri , afaqs!, New Delhi | In Digital | July 26, 2011
Just one year and three months into the business, has over six million people registered on its site, and operates out of 50 cities. In this interview, the daily deals site's CEO (chief executive officer) and co-founder talks about how he plans to stay ahead of the competition in what is today a cluttered field.

afaqs!: Are you happy with your progress in India? What are your plans for entering the international market?

Bahl: We are now over a 400-people strong team including a 200-strong sales force. We have forayed into products (electronics, fashion and accessories) and travel deals, apart from local (service) deals in order to expand our usage base.

A large part of business still comes from the metros. However, we have seen some really encouraging results from Tier 2 and Tier 3 cities. When we launched in Meerut, we sold 250 units in our very first deal, a car cleaning service, and it was not a cash-on-delivery deal. We were surprised that 250 people from a small city like Meerut pulled out their credit or debit cards to buy a deal from Snapdeal.

There is lot of work that is happening in the Indian market. We had a very painful and steep learning curve in India. If we can leverage that learning and use it in other markets, there could be significant headroom for growth. We may look at expanding into Singapore, Malaysia, Indonesia, Philippines and Vietnam in this financial year.

& #VIDEO1 & #afaqs!: More than 30 daily deal sites are active in India. All offer similar services. How do you fight clutter and differentiate your offerings?

Bahl: There are probably an equal number of car brands in India. Each one has four wheels, a steering wheel, wipers, dashboard and engine, but still people pay more for some. Some car brands sell more than others and some don't sell at all. It's the same game in the daily deals business.

If you provide a better quality of service, choice and customer support, and are able to grow the eco-system (merchants) with you, you will stand out and break away from the clutter.

afaqs!: Global daily deals companies usually tie up with merchants on exclusive deals models. Are there any plans to leverage existing merchants relationships and offer deals, which they can't offer to other deals sites?

Bahl: Merchants are the oxygen in our business. As a policy, we don't do anything that will limit the growth of business of merchants, who are partners in our growth. We will never impose conditions like 'exclusive deals'. Other daily deals sites approach the same merchants, whom we partner for deals. Usually those merchants call our sales team, whenever other sites approach them. We have a standing instruction to our sales team that we should encourage the merchants to try out other companies in the business. Nine out of 10 times after that, the merchant only works with us.

afaqs!: Is roping in merchants a challenge?

Bahl: Five out of 10 deals that we feature on Snapdeal now are inbound request from merchants. So, we don't have to go to the market to source 50 per cent of the deals that get featured on our site. And, this trend is increasing. Thus, the cost of business development or sourcing deals is actually dipping with time. As we expand more, we will need less sales people.

afaqs!: Many consumers believe that daily deals sites offer deals that don't belong to big brands or are not quality deals. How do you make sure that Snapdeal offers quality deals?

Bahl: Whether we offer a deal for a popular/known merchant or a new/lesser known merchant, one thing we try to make sure is that the customer experience should not be different or be discriminated against.

We carry out a number of checks to make sure that the customer is getting a great experience. But, there are times where we believe that merchants may not have lived up to the expectations of the customer. We have a seamless refund policy -- there were times when customers have written directly to me saying that the "chicken was cold". We even issued a refund then. We are very liberal that way and believe that you can't be short-sighted about such things.

We get less than 1 per cent negative reviews, compared to the industry standard of double-digit percentage of negative reviews. Many of the large brands are coming to us saying that "we want to do something with Snapdeal. Since there's no money to be paid upfront, it is much better than putting up a half-page ad in The Times of India."

Levi's, for instance, is running an end-of-the-season sale right now, with up to 30-40 per cent discount. Now, why should they spend Rs 10 lakh to run an ad in Delhi Times/Bombay Times daily, if they are already a strong brand? They can use our platform and offer a top-up discount offer of Rs 500 (to Snapdeal members) to drive customers to stores. For a brand manager, this is an amazing deal, as he only pays the additional cost of customer acquisition.

afaqs!: Do you see any threat from bigger established players like EBay and Rediff, which have also ventured into the deals business in India?

Bahl: Winning in this market is very different from playing in this market. It's very easy to start and launch a 'deals tab' on your website and say here are some deals. But, scaling up this business is not a division in a company, neither is it a feature on a website. It's a business in itself. Unless it is done with undying and undiluted focus, it's very hard to crack. Daily deals is not an easy business. There is lot of work that goes on in the back end to understand what consumers want and how to provide that in the easiest possible manner.

afaqs!: How do you tackle the spam issue?

Bahl: You consider a message as spam, if you find it irrelevant. Why do we consider SMSes from real-estate developers as spam? That's because we don't go out and buy real-estate every day. But, if the SMS/email has something which you could think of doing the same day or in the next few days, you will not see it as spam. We have started working on relevance, and consumers will soon start getting information on deals, depending on the behaviour and usage pattern on

afaqs!: What are your plans on the mobile front?

Bahl: In our business, mobiles can currently be used mainly for information transmission purpose. Though the launch of one-time password (OTP) facility has made the transactions through mobile safer, it is still cumbersome for consumers.

Until the consumers get more comfortable with the mobile transaction funnel, or authorities find a much easier solution for mobile transaction, it will not be easy to scale transactions. Thus, we focus on using mobile for information delivery. We have already launched an Android app. More will follow.

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