Snapdeal to Invest $100M in its Mobile-Only Zero Commission Marketplace Shopo

Snapdeal had acquired a couple of year back, and now the eCommerce firm will invest $100 million to enhance technology and expand the Shopo brand. Shopo was launched about 2 months back, developed by a 14-member team, it is a mobile-only marketplace that works on on a zero commission model for vendors.

It aims to bring small and medium businesses (SMBs) online, and already have 20,000 shops on the platform. It targets of getting one million such shops on Shopo in the next one year. Its app which is available for Android and iOS users, allows entrepreneurs and small shops to go online without submitting any documents and avoids long verification procedures. Also, as mentioned above they don’t have to pay any commission for the sale.

Shopo has a chat-based model that allows sellers to connect with buyers, and individual selling can click a photo of their products and list on Shopo. Also, it is looking at offering SMBs help with logistics and payment gateways.

“Sellers can use our logistics and payment gateways, just like they would use any other courier service. It is just about making the seller experience a hassle-free one,” Bahl said.

Inspired by Alibaba’s Taobao, which facilitates consumer-to-consumer (C2C) retail by providing a platform for small businesses and individual entrepreneurs to open online stores, Shopo is also following the same model. This is the second Alibaba funded eCommerce firm that is going into a zero commission marketplace model.

In April, Paytm had launched a zero commission mobile marketplace app for small and mid-sized firms. Also, in the same month, Snapdeal acquired mCommerce payments firm FreeCharge for $450 million in cash and stock, to compete with Paytm. Freecharge and Paytm earlier had the same business model of facilitating mobile payments for mobile number recharges, bill payments etc. until Paytm expanded into an eCommerce marketplace model.

Looking at the path that both Paytm and Snapdeal are following, they appear to be deploying same strategies for vendor and customer acquisitions. At the same time, they are also competing with other marketplaces in the country – Flipkart, Amazon, Shopclues and their likes.

Snapdeal had announced its plan to make up 10 more investments this fiscal year, to take on Flipkart and Amazon. In a recent exclusive interview with ET, Kunal Bahl said that, “The one thing I am very, very clear about right now is that I think we’re going to be No. 1 (in terms of sales) by March 2016. I think we’re going to beat Flipkart by then.” Soon after that, firing back at Snapdeal, Flipkart’s Co-Founder Mukesh Bansal told ET that, “No online retailer in India will be even half Flipkart’s size by March 2016. There is not a shred of doubt based on all the market numbers we have today.”

Will Alibaba’s involvement in Snapdeal and Paytm give them an edge against others? And how will the two now compete against each other since they are moving ahead with similar growth strategies?

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