Chinese e-commerce giant Alibaba holds less than 3% stake in Snapdeal and has no role in its operations or governance, the ecommerce company’s cofounder and CEO Kunal Bahl said. In an exclusive interaction with ET’s Aditi Shrivastava & Alnoor Peermohamed, Bahl said both domestic as well as foreign companies are expected to abide by India’s comprehensive rules for the digital commerce sector.
His comments come amid a wider backlash against Chinese technology firms globally and in India. Separately, Bahl and cofounder Rohit Bansal also spoke about Snapdeal’s long term bet on private brands and on staying away from the hyper competitive grocery delivery segment. Edited excerpts.
How do you view the recent policy changes, especially the ban on Chinese internet companies?
Kunal Bahl: India’s comprehensive set of rules governing the digital commerce sector are designed to provide a level playing field and promote long-term, orderly growth of the sector. All companies, domestic or foreign, are required to abide by the same. The government is best placed to determine any violations and we are supportive of government decisions in this regard.
Rohit Bansal: Certain practices are not in the right spirit of the law, which always create a distorted picture of competition; that is a non-ideal situation for us.
What about the restriction on Chinese investments, given that Snapdeal counts Alibaba as an investor?
Kunal Bahl: They (Alibaba) are a very small investor, owning like 3%. These are passive, financial investors who have never had any role in the governance or operations of Snapdeal.
What do you make of Reliance Jio Platforms’ massive fundraising, and its impact on the broader Indian internet ecosystem?
Kunal Bahl: All the investments that have come recently into Jio Platforms have unequivocally raised the profile of India’s tech ecosystem.
Would that mean lesser capital for others as investors will not want to bet against Reliance?
Kunal Bahl: In terms of sources of capital, obviously there are many large companies in India, domestic groups, domestic family offices that are getting into backing technology companies. I don’t think anyone has not been able to build their company because of paucity of capital… there may come a point where we see IT majors also taking significant interest in the startup ecosystem, given that they are also heading towards productization.
Why is Snapdeal not doubling down on grocery, a space all other large players are trying to crack?
Kunal Bahl: We haven’t seen evidence on how grocery in India can be sold with significant positive unit economics and without taking inventory risk. Also, we believe that to do grocery involves significant investments in operating and fixed costs. We do not believe that is the best deployment of our capital
What’s the philosophy behind some of the private labels – Unbox and Home-Tales — you are selling?
Rohit Bansal: We work very closely with sellers to help them understand deeply what consumers are looking for. As a result, it works very well for them because when they create that, they are able to offer a high-quality product at a good price.
We understand that Covid-19 is causing a lot of offline merchants to list on marketplaces. Is Snapdeal seeing the same trend?
Kunal Bahl: There is some amount of pain, more around liquidity. At some level, the pandemic has made it very clear that selling online is the fastest way to entrepreneurship. So, while there is some attrition, we are also seeing…new sellers coming on board.
Is going public on the cards for you?
Kunal Bahl: For us, what is sacrosanct is that we want to generate significant positive unit economics… There is currently no defined plan… We do feel optimistic about the future as a public company, given we have very strong focus on economics, differentiated brand, differentiated positioning…
How will the growing competition in the value e-commerce segment from leaders like Amazon, Flipkart and Jio affect Snapdeal’s unit economics?
Rohit Bansal: The Indian e-commerce space has always been competitive. We stand for value, but at the same time we want to provide value to buyers in a manner that is affordable. By focusing on cost of operation, we’re able to provide the same or very good value to the end consumer, while ensuring we’re maintaining positive unit economics.
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