Snapdeal to Spend Rs 350 Crore on Supply Chain Logistics in FY15

Homegrown online marketplace Snapdeal will invest Rs 350 crore this fiscal year (2014-15) to expand its supply chain infrastructure as it aims for a stronger foothold in India's internet retail market that is estimated to expand seven-fold to $22 billion by 2018.

Besides, the Delhi-based company also seeks to triple its seller base to 100,000 by March 2015, trying to cash in on the rising number of small and medium enterprises (SMEs) turning to the internet to increase sales and presence.

On Tuesday, Snapdeal, controlled by Jasper Infotech, had announced setting up of 40 fulfilment centres across 15 cities to help its over 30,000 sellers.

"We will invest Rs 350 crore in 2014-15 fiscal in supply chain management," Snapdeal co-founder and chief executive Kunal Bahl told reporters in Delhi.

Explaining the rationale behind the investment, Snapdeal co-founder and COO Rohit Bansal said that for a larger presence beyond the top cities, a stronger supply chain is required to not only reach consumers in a short time but also to add sellers from all corners of the country.

"We are an online marketplace and to expand further and reach out as far as possible we need to ramp up our supply chain like our announcement of 40 fulfilment centres across 15 cities. We plan to expand it to 75 centres covering 30-35 cities," he added.

About 60 per cent of the company's demand comes from beyond the top cities like Delhi, Mumbai, Kolkata, Chennai and Hyderabad.

"We are also talking to non-banking financial companies (NBFCs) and banks to provide cheap loans to our sellers so that they can invest in technology and better their service," Mr Bansal said.

Going ahead, Mr Bahl said Snapdeal seeks to enhance the experience of both buyers and sellers, which will be facilitated through investment in technology.

Last month, the company announced the acquisition of Doozton.com, an online product discovery technology platform, for an undisclosed amount.

"We want to be known as a technology company. Our focus is on automation. We are looking at acquiring tech firms to further enhance user experience on mobile platforms, which now contributes to over 50 per cent of all orders and will rise to 75 per cent by next year," Mr Bahl said.

He also said that it would not be "unrealistic" to go for 3-4 acquisitions in 2014.

On the type of acquisitions, Mr Bansal said, "We are looking at firms in payments (mobile) and technologies to increase buyer and seller experience."

Snapdeal will also increase its headcount, preferably in the engineering and products section, further indicating its strong thrust on technology.

"At present we have about 300 people in the engineering and products section. We expect this team to swell to 600 by 2014 end," Mr Bahl said.