While not saying it in as many words, Bahl indicated that Snapdeal might also take the IPO route.
According to sources close to the company, Snapdeal plans to launch an IPO by 2019. Bahl also indicated that while investors’ perceptions might change, a company can launch a blockbuster IPO if it stuck to the plan and focused on the core audience.
The company has managed to cut down its costs by 60 per cent, he said in the mail. The latest email was more optimistic that his previous one to employees where he had admitted to making mistakes. Bahl said they were “on the path to profitability”.
“Many of you would have seen the wildly successful IPO of D-Mart. It is incredible the clarity of thought the company has and the focus it has on efficiency and profitability. While investors in the ecosystem may keep changing their point of view on what ecommerce companies
should do — from conserving cash at times to driving top line growth at other times — it is clear from the D-Mart story that having a consistent strategy, building thoughtfully and for the long term creates an incredible outcome,” Bahl said in the mail.
Over the past week, Bahl said, he met people who have been either closely watching the company or have been associated with it and has learnt a few things. Bahl said the two main takeaways from D-Mart were focus on unit-level profitability and core audience. “While many other retailers were growing stores rapidly, D-Mart was ensuring that each store is profitable so that their growth is sustainable and well thought through. In their business, too, like ours, I’m sure there would have been differing voices in 2005-2010 on whether rapid expansion of stores and top line is the right strategy or focusing on unit economics. Clearly, in spite of the external pressure they may have faced, they stuck to their principles and the results are phenomenal,” he said.
Snapdeal — which in the past one year has let go of more than a third of its workforce to cut costs so that it could reach profitability faster — was going for another “pivot” in its business to concentrate more on customers, said sources. It would be the fourth pivot or change in business plans the company has taken in its lifetime.
Sources said the company would take a targeted approach and concentrate on a core set of audience instead of trying to grow in multiple directions.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.