Snapdeal tailors a $100 million fashion strategy

After losing out on acquiring Jabong earlier, Snapdeal is planning for a big game changer move in the fashion space.

Founder Kunal Bahl is planning to invest $100 million in technology, logistics and suppliers to redefine ways fashion is retailed online in India.

"In the next one year, we would be investing $100 million building capabilities around fashion which is affordable but very high quality at the same time," Bahl told students of Indian Institute of Management Calcutta.

Kunal has a different view on online fashion business.

"It can't be brand driven if it has to truly live up to its potential. At some point, online model has to mirror offline model where 90% of sales is not branded. Today 90% of all fashion sold online is branded. I think something is wrong here," he said.

"People will eventually start buying fashion which is not branded. Hence, our bet is there."

The investments would be in logistics, technology and some key partnerships that Snapdeal has currently with some brands, he later told reporters.

Bahl believes current business models for online fashion is flawed and not viable.

"I am not the judge of right or wrong but all I can say is that it's (business model for fashion) not sufficient. The purpose of doing fashion online is to make money. If you are selling brands at a loss then why sell them in the first place? I can't disclose anything more at this point," he said.

Meanwhile, the Centre's demonetisation move has hit cash on delivery (COD) business. Bahl said, "There is a short-term dip in the COD business mode. Specifically, discretionary purchases have taken a dip,"

However, he believes that in the medium to long run, it would be a good thing. Bahl said that the dip was temporary and it would again take a sharp upturn shortly.

COD is an expensive way of doing business. After this, salience of COD will go down. In the interim, people (businesses) need to innovate to make online payments a compelling case for the buyers, he said. But jury is out on what would be immediate impact.

Bahl said that in the medium to long term, it is a right thing to do. "It simplifies the e-commerce business on the whole... This is better economics for the e-commerce business".

To convenience the customers who had ordered on the COD mode, Snapdeal had been insisting on making payments using Freecharge e-wallet.

"For the last three to four days, we are seeing good traction in this," Bahl said.

Traditionally, COD would comprise 70% of the total transactions. "Now this has come down".

Asked whether there had been an overall dip in sales over the last few days, he said, "It is not material".

With inputs from PTI