E-commerce major Snapdeal expects to be operationally profitable in the next three years and is investing heavily in building infrastructure to scale up its business
E-commerce major Snapdeal expects to be operationally profitable in the next three years and is investing heavily in building infrastructure to scale up its business. "More specifically in the next three-year period, at least in our business, I feel fairly confident that we will be at that point of profitability," Snapdeal CEO Kunal Bahl said at an International Chambers of Commerce event.
Bahl said that there are large infrastructure gaps, which the company and other players in industry are trying to bridge with investments. "We have to frontload a lot of our investment to build infrastructure, but I don't think we will have to do that forever. Today, we are building essentially highways of e-commerce, but there are only cars on it. As number of cars increases on it, the economics will start marking sense," Bahl said.
Bahl pointed out that global e-commerce giant Alibaba was also not profitable for many years and last year they generated EBIDTA (operational profit) of USD 5-6 billion. "Once profitability starts in these (e-commerce) businesses then they tend to become very profitable. Arguably to be the most profitable company in the world, you have to front load capability because if their is no capability these businesses will disintegrate over a period of time," Bahl said. He said that while building capacity, e-commerce segment is generating lot of jobs and also leading to optimum utilisation of existing infrastructure. "We would have created direct-indirect jobs of around 3-4 hundred thousands of jobs just as one company. As an industry, the number would be over a million," he said.
When asked if Snapdeal is exploring alternate business options, Bahl said the company is looking to work in partnerships to grow its business. "We now work with 60-70 logistics companies across the country. We work with India Post very successfully where they are delivering hundred thousands of packages daily. Growing up everyone use to tell me India Post service is not great. We have been pleasantly surprised how good their network is," he said.
Talking about business statistics, Bahl said two years ago, 5 per cent of Snapdeal orders were made from mobile phones which has now increased to 75 per cent.
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