Japan’s Softbank sees India Snapdeal investment as another Alibaba
NEW DELHI: Japanese technology giant SoftBank said it is hoping to replicate its success with China’s Alibaba through its $627-million investment in leading Indian online marketplace Snapdeal.
SoftBank, a one-third owner of e-commerce giant Alibaba that just staged a record-breaking $25 billion initial public offer, has become the biggest single investor in the Indian online retail firm.
SoftBank, run by billionaire Masayoshi Son, has bought into the company which styles itself as an “Indian version” of Alibaba and has grown explosively in the country’s fast-expanding e-commerce market.
It’s part of a $10 billion Indian investment binge planned by the Japanese company in the next few years.
“Snapdeal has the potential to be the Alibaba of India,” Son told India’s CNN-IBN.
In just four years, Snapdeal, whose other investors include top global asset manager BlackRock, has risen to become India’s biggest e-commerce marketplace with 25 million users.
“Alibaba had a similar genesis to Snapdeal,” Ankur Bisen, vice-president of retail consultancy Technopak, told AFP, adding, “Snapdeal has demonstrated an ability to be a seriously scalable business.”
Kunal Bahl, the 30-year-old co-founder of Snapdeal and its chief executive, said Tuesday that the portal was “thrilled” to ally with SoftBank.
While Snapdeal has grown quickly, the road to success was studded with false starts for Bahl and partner Rohit Bansal, self-confessed “tech geeks” and “serial entrepreneurs”.
Bahl, who holds US engineering and business degrees, joined Microsoft out of school but was deported over visa problems.
He returned to India and teamed up with school-mate Bansal, an Indian Institute of Technology grad, and got involved in retailing.
“It was a bit of a sobering experience (getting deported) but it turned out way better than even an optimist could have expected,” Bahl joked in an interview recently with AFP.
The pair launched several businesses and at one point wondered how they would pay wages. But they hit lucky when they went to China and, inspired by Alibaba, decided to create an online marketplace to help businesses reach a wider consumer base in India where real-estate costs deter expansion.
“We were late to enter the market but we’ve been in hyper-growth mode,” said Bahl.
While Bahl has big ambitions for Snapdeal, it’s still a sales minnow. Alibaba last year sold $248 billion in merchandise while Snapdeal hopes to crack the billion dollar sales mark next year.
Unlike a number of inventory-led Indian online retail portals, Snapdeal steers away from costly warehousing, Bahl explained.
“The business model is about simplicity.”
He was euphoric about e-commerce possibilities in India and for Snapdeal.
E-commerce represents just 0.8 percent of India’s retail pie, compared to seven percent in the US and 10 percent in China, according to Technopak.
“We’ve only just begun the journey. It’s hard in someways to get one’s head around the potential — you just know it’s humungus,” Bahl grinned.