Snapstyle Social Commerce for Snapdeal India

S na ps tyle S o c ia l C o m m e rc e

fo r S na pde a l

in India n M a rke t

Wharton Business Foundation SpecializationSeptember 2015

Introduction E-commerce in India and the goals and objectives of Snapdeal

In recent years, Indian consumers have grown increasingly comfortable with shopping

online, snapping up electronics, apparels and other consumer goods. The enormous

potential is catapulted by the country's rising disposable incomes and greater internet

penetration. E-commerce (B2C, C2C) revenues have been growing at a ~50% year on

year. The competition has been intensive among the three largest online marketplaces:

Flipkart, Snapdeal and Amazon. Flipkart's total $3.2 billion raised, Snapdeal's recent

$500 million round led by Alibaba ($1.6 billion in total) and Amazon's $2 billion

investment plus $3 billion commitment are all affirming the tensity of the battle for the

future of retail market in India – currently a $500 billion market, and estimated to be

$1.4 trillion ahead.

This analysis will be focused on e-tailing as the digital opportunity proposal is first

made for online fashion retail. But notice that the strategy can eventually be applied to

many other consumption sectors.

*All the monetary numbers are in USD throughout the analysis, if not otherwise specified


Founded in 2010, Snapdeal has transformed from deal website to a key player in e-

commerce landscape:

➢ A marketplace enabling e-commerce, no inventory, no private label➢ A “discovery platform” for both consumers and merchants➢ A marketing distribution company, leveraging technology➢ Improving market accessibility and availability at the best prices➢ As of now, 25 million subscribers, 150,000+ businesses, 12 million+ merchants, gross

value of the goods sold hitting $3.5 billion➢ Building warehousing and logistics services to enable best customer experience➢ Snapdeal's ultimate goal is to build “a brand for daily lives”


Given that the market is still young, it's critical to invest in building scale (multi-sided

network effect). Internally, Snapdeal is focusing on building the right infrastructure,

technology, brand and people. But externally, a furious price war is going on to fight for

consumers and merchants' mindshare. Companies have incurred losses due to heavy

discounting strategy. Lower prices won't retain customers in the long run, nor help with

their stand with premium brands. And there is an increasing pressure from investors to

cut down on discounting and concentrate on making profits.

For Snapdeal to sustain and win in the battle, it is important to:➢ Build a go-to-place in buyers' minds for the search of quality goods and best values➢ Develop a platform of high traction so sellers can focus to prosper➢ Embrace multi-sided platform's advantage to grow organically and earn profits by

customers' success

Hence I am proposing a social-commerce mechanism implemented in the format of

social marketing reward system to move beyond heavy discounting approaches.

The Proposal – Snapstyle

SnapstyleDigital guides, credits and ads via buyers' social activities for fashion and lifestyle categories

Snapstyle, fundamentally, a social-commerce mechanism for buyers to get rebate

shopping credits when they promote the sellers/products by sharing and/or socializing

with the new purchase demonstration.

This approach would be classified as micro blog posts and social activities enabled by

cloud-based system and mobile app for the trading of online coupons and marketing

ads.


Snapstyle will utilize the following 2 market phenomena:

Network effect

In economics and business, a network effect (also called network externality or demand-

side economies of scale) is the effect that one user of a good or service has on the value

of that product to other people. When a network effect is present, the value of a product

or service is dependent on the number of others using it. Online social networks work in

this way, with sites like Facebook becoming more attractive as more users join.*

Centers of influence (COI’s)

Sometimes referred to as Circles of Influence, describes the key people within a

businesses target client segment they wish to penetrate. With the advent of the digital

age, COI’s is an increasingly used strategy to harness the power of influencers on

prospective customers to grow a business as defined within a Growth Plan.*

*Definitions from Wikipedia


Snapstyle social-commerce will accelerate information dissemination among buyers

from Center of Influence via strong and weak ties. More buyers are brought in because

of referral and reward based network effect, which is the foundation of organic growth

of buyers and sellers. Like how the physical word-of-mouth effect has driven Snapdeal's

fast growth, but in a digital way.


Initially Snapstyle social-commerce will be implemented for fashion category:➢ Fashion is highly visible, communicative and social, more than price-sensitive➢ Social influence and engagement can enhance fashion's emotional value➢ Apparels, footwear and accessories are easier to handle logistically, quicker to build

trust base for future sales of other goods➢ Fashion makes up about 35% in e-tailing sales, and is growing faster than others➢ Fashion has been the highest margin segment at 35-50% (electronics has 5-10%

margin)➢ It's aligned with Snapdeal's goal to sell fashion product worth $2 billion in 2015-16

(from $600 million in 2014-15)➢ Fashion has long-tail phenomenon, profits can be increased by technology


Snapstyle will have these core rules:➢ Buyers can publish fashion posts to showcase purchases, looks and life stories (with

links to merchants) and earn base and conversion based shopping credits➢ Buyers can refer other shoppers to earn conversion based shopping credits➢ Sellers of linked merchants and all shoppers can comment on buyers' posts➢ Sellers and shoppers can follow others for latest updates➢ Shopping credits can be applied to purchases of promoted merchants➢ Shopping credits are transferable to other shoppers➢ Sellers can participate to promote their business by taking shopping credits in

exchange of marketing priorities


3 personas and scenarios:

A) Kiran works for the family business in a 2nd-tier city. She recently bought a saree on

Snapdeal for her cousin's wedding. She was happy with the purchase and uploaded a

picture of her wearing the dress onto Snapstyle profile to get shopping credits, which

felt like extra discount. She also shared it on WhatsApp with some friends. One good

friend saw the good experience and followed the link to buy another saree on

Snapdeal. So Kiran got additional shopping credits and she decide to use the credits

to buy new shoes on Snapdeal.


3 personas and scenarios (cont'd):

B) Bhaanu works in a big city. He just bought a new suit for the social events. He

uploaded a nice photo onto Snapstyle profile to get shopping credits. The seller

replied to his posting with garment care tips which he felt the seller was really

considerate. At the social event a new friend complimented his outfit a lot and asked

about where to buy it. So Bhaanu brought up his Snapstyle QR code and let the new

friend scan it and save the look. Later Bhaanu was rewarded with additional

shopping credits as the guy he met purchased a jacket on Snapdeal. Bhaanu

transferred all the credits to his younger brother who is graduating and needs work

clothing soon. His brother can sign up on Snapdeal via the invitation with shopping

credits to use.


3 personas and scenarios (cont'd):

C) Samir, a middle-age dad, was browsing on Snapdeal to look for a suit as the birthday

gift to his son. Samir entered basic criteria and Snapdeal prompted Bhaanu's

Snapstyle posting because he is similar to Samir's son. Bhaanu looked handsome in

the picture so Samir drilled down to see Bhaanu's Snapstyle profile. Samir decided to

get one suit via Bhaanu's link. Unfortunately it's discontinued, but it's not a problem.

Snapdeal's “Find My Style” (Snapdeal's existing apparel visual search) found Samir a

list of similar suits, and he bought the 1st one on the list.

B) C) A couple of days later Bhaanu got surprise shopping credits when Samir's order

was delivered. He felt great about people appreciating his taste, and he decided to buy a

tie on Snapdeal to upgrade his Snapstyle profile. He searched around and found one

that he could apply the shopping credits to. Got it! More happy purchases!

Situational Analysis – External Environment

(Required analysis. You can jump to slide 34 to continue directly with Snapstyle product proposal.)

External Environment – Relevant social, legal, economic, political and technological trends

First, an overview of India's SLEPT environment analysis for fashion e-tailing for

Snapstyle feasibility:

Social➢ Population around 1.27 billion, more than 50% below the age of 25 and more than

65% below the age of 35➢ Younger population has developed more appetites in international lifestyles➢ Urbanization rate standing at 31.16% now, expected to be 40.76% by 2030

Legal➢ 100 % FDI* is allowed in B2B e-commerce but largely prohibited in B2C segment➢ Foreign retailers operating in India are shifting to the marketplace model

*Foreign Direct Investment



Snapstyle feasibility (cont'd):

Economic

➢ GDP hit $2.07 trillion in 2014, a 7%+ annual growth rate since 2010➢ Middle class is projected to grow from 50 million to 583 million by 2025➢ Online shoppers to grow from 40 million to 100 MM by 2016 and 250 MM by 2020➢ Retail market expected to grow from $600 billion now to $1 trillion by 2020➢ E-tailing market estimated from $3.5 billion in 2014 to be over $100 billion by 2020



Snapstyle feasibility (cont'd):

Political➢ Foreign direct investment (FDI) in e-commerce is against consumers’ interest➢ Keen on promoting Indian manufacturing, especially in textile and garment

industry, under the “Make In India” program

Technological➢ Internet users grew 17%+ in the first half of 2015 to 325 million, 60% via mobile➢ By 2018, 500 million Internet users, among them 280 million use smartphones➢ Local languages on Internet grew 47% by Jun 2015, next big user set from rural area➢ 2G & 3G are still prevalent now, 4G is set to grow with little price difference

External Environment – Nature and extent of demand (demand elasticity & size of the market)

Snapstyle social-commerce will be first available for fashion e-tailing. A closer look of

people and market perspectives:

People and fashion➢ Younger population are more geared towards the consumerism trends➢ Social-psychologically, people want to follow those who are viewed as splendid➢ Although fashion blogosphere is nascent, it's emerging to shake Indian fashion➢ Many fashion bloggers are women in their 20s, a successful fashion blog can have

10,000-60,000+ followers➢ Brands have realized fashion bloggers' powerful influence over the followers,

collaboration with them generate revenue and awareness➢ Spectrum of fashion and people are both long-tail in nature; commercial long-tail

effects (profits) can be amplified by internet platform


Market projections & phenomena➢ Apparel market (online and physical) is expected to grow at 9%, from $41 billion in

2013 to $102 billion in 2023➢ While online retail is expected to grow from $1.7 billion in 2013 to $7+ billion in

2016, online fashion retail is expected to grow from $559 million in 2013 to $3-6

billion in 2016, a major driver of growth


Market projections & phenomena (cont'd)➢ Menswear had been historically the largest segment➢ Women's wear had been growing faster than other segments

➢ Apparel brands see 50% growth in women’s western wear➢ Kids wear is growing rapidly with higher growth in girls wear


Demand elasticity – necessity vs. fashion vs. advertising➢ The demand for apparels, accessories, footwear and more no doubt is elastic.

People have to wear clothes, but there are many style choices and price ranges.

Stores offered sales to maintain the demand.

➢ But it's also important to know the difference of “fashion advertising”. Beyond

the bare necessity of clothing, the demand of clothing is highly influenced by

advertising, study shows. Socio-economic class and lifestyle are also key factors.

Customer loyalty is an important factor driven by style, and that price is actually

a second driver.

So Snapstyle – social, credits and ads, has the chance to convert influence into

effective advertising with silver-lining discount strategy. It can also increase the

brand values of both e-tailers and Snapdeal marketplace with quality user-

generated content (style guides).

External Environment – Industry structure – competition

The 3 most watched e-tailing leaders in the: Flipkart, Snapdeal and Amazon. They are

all eyeing the growth driving fashion sector. Besides keeping recruiting fashion retailers,

they have been developing new technology and acquiring fashion startups to widen

product offerings and improve shopper's experience. They are all operating in multi-

brand marketplace model under the marquee names.


By Q2 2015, these 3 leading companies' stands:

Flipkart Snapdeal Amazon

Founded 2007 2010 2012(Junglee) -13

Model Inventory-led to

marketplace

Coupon site to

marketplace

Marketplace

Marketshare ($6.3B)* 44% 32% 15%

Sales (GMV**)* $4.5 billion $3.5 billion ~$2 billion

Sellers 30,000 100,000 100,000

Monthly Unique Visitors 23.5 million 17.9 million 23.6 million

Investment $3.2 billion $1.6 billion $2 billion ($3

billion committed)

*From different reporting authorities

**Gross merchandise worth


These 3 leaders have also strategized to compete in fashion category:

Flipkart Snapdeal Amazon

Acquisition Myntra (50% market

share in online fashion)

Exclusively (high-end

designer), Shopo (P2P

artisanal)

In talks with Jabong

Guide Flipkart Fashion

Diaries, Myntra Digest

(contributing authors)

Snapdeal Blog

(general), Exclusively

celebrity looks & editor

style guides

Designer

collaboration and

editor style guide

Discovery

Technology

Integrated image

search (powered by

Visenze )

Stand-alone Find My

Style image search

(experimental)

Stats-based

recommendations

Social Flipkart Ping (general),

Style Mynt Makeover,

Myntra profiles

(personal not social yet)

Reviews (general)

, blog comments, app

referral Snapdeal cash

Reviews (general)


As a summary, overall in fashion e-tailing, Flipkart so far offers the best discovery

efficiency and social engagement. Snapdeal is a bit behind. It will worth the investment

of Snapstyle social-commerce for the growth driving fashion sector. And not just

fashion, this approach can be later extended into beauty, decor, kids & baby, services

and many categories when more market behaviors are discovered.

The more mature Chinese market can be a good reference. In China, fashion social-

commerce emerged as separate services independent from e-tailing marketplace such as

Taobao. Prominent examples include Meilishuo ($2-3 billion valuation) and Mogujie ($1-

2 billion valuation) which are both user-generated content based fashion social

commerce services. Different from merchant-led, the consumer-led model has been

more effective to drive demand. And it has been proven to effectively increase

conversion rate and user viscosity by building communities around fashion styles.

These two platforms both operate on commission from the associated sales on 3rd party

e-tailing marketplace.

External Environment – Industry structure – entry/exit barriers

Snapstyle social-cmmerce will will have barriers from 2 perspectives – fashion e-tailing

and social-commerce.

Entry barriers of fashion e-tailing:

For a multi-brand marketplace to enter fashion e-tailing, it's essential to build:➢ Relevant merchant variety and availability to differentiate from exclusive brand➢ Competitive prices to satisfy consumers' expectation➢ Quality control and customer protection to compensate indirect interaction➢ Technology and experience design to provide efficient product discovery flow➢ Brand identity and market traction to retain buyers and sellers, and to defend

predatory pricing

External Environment – Industry structure – entry/exit barriers

For a fashion retailer to enter online space, it's important to have:➢ Economies of scale to provide competitive prices➢ Or unique product line to take advantage of fashion's long-tail effect➢ Strategies with the marketplace to build awareness, brand identity and loyalty

Entry barriers of the new Snapstyle digital opportunity:

To enter social-commerce with user-driven guided shopping, there must be:➢ Technology readiness; marketplace product variety and availability➢ Policies and governance to avoid illegal or improper user-generated content➢ Quality, authentic and exclusive initial content to kick start the momentum

As for exit barriers of both fashion e-tailing and social-commerce, since marketplace is

built on connection and relationship, the most important assets are users. So asides from

technical wrap-ups, customer relationship management will be the heaviest work.

External Environment – Marketing Channels

Social-commerce is indeed a marketing channel for e-tailing. Social-commerce itself is

also a digital service good that requires marketing. The focused is on the second topic.

Marketing channels for social-commerce (or social engagement program)

Although there is no solid social-commerce example as of now, Myntra is still an

example of social engagement. When they first kicked off its early stage blogging service

Style Mynt, they used social platforms such as Facebook to raise the awareness of this

new fashion guide service. Myntra is now viewed as a “brand that understand fashion.”

Shoppers check Myntra for trends and guides even when they are shopping offline.

Situational Analysis – Internal Environment

(Required analysis. You can jump to slide 34 to continue directly with Snapstyle product proposal.)

Internal Environment – Resources

Resources needed for Snapstyle are categorized into:

Leadership➢ Map visions, understand and predict market landscapes➢ Persuade investors and raise fund➢ Lead and oversee cross-unit collaboration

Technology➢ Integrate and augment existing functionalities: blogs, comments, curation,

notification, recommender, cash credits, image search, etc.➢ Improve user experience design according to feedback

Marketing➢ Market and customer research in social-commerce, current fashion influence scene➢ Experiments with Concierge or Wizard of Oz approach to understand users

Operation & Analysis➢ Solve customer service issues, monitor user behaviors➢ Report financial earning and loss

Internal Environment – Brand diagnosis

Snapdeal positions itself as a discovery platform and aims to build “a brand for daily

lives.” In fashion Its Exclusively.com (high-end designer) and Shopo.in (artisanal) have

more fashion geared positioning.

Fashion on Snapdeal is a category➢ Currently makes up around 35% of Snapdeal's sales and 55-60% of transactions,

from 21% of sales and 30% of transactions in 2012➢ Second largest section just below electronics & appliances➢ No specific category-wise brand identity, included in general deal campaigns

But fashion gets Snapdeal's ambition➢ Aims to generate $2 billion revenue by 2015-16, up from $600 million in 2014-15➢ Strategies set to cater both multi-brand and exclusive stores➢ Tied up with Fashion Design Council of India to launch Designer Studio➢ Acquisitions of fashion start-ups

Internal Environment – Problem definition & Critical Factors

So ,the approach of Snapstyle social-commerce is aiming to solve these problems for the

following stakeholders. To improve differentiated marketing and better position fashion

sector with its special value.

Buyers➢ Need easier way to understand fashion trends and find styles suitable for personal

life and social style instead of navigating among huge number of products

Sellers➢ Often start by signing up with 3-4 platforms at most, but would like to work on the

platform that will give them the highest traction

Snapdeal ➢ Achieve generalization and differentiated marketing (Amazon as an example)➢ Gain loyalty from both buyers and sellers➢ Build a brand identity in front of buyers as a go-to-place for fashion for daily lives➢ In-depth support and understanding to enable sellers' success

Internal Environment – Problem definition & Critical Factors

Critical factors within Snapdeal that will benefit the development of Snapstyle social-

commerce:

Technology development already in progress➢ Machine learning, recommender and image search modules➢ Snapdeal cash, blog, guide and curation modules

Business development already in progress➢ Setting up regional fashion teams➢ Working with designers and influencers to close the loop

Snapdeal's core values➢ Innovation, change, openness, ownership and honesty

Recent funding led by Alibaba➢ Tremendous successful experience in social-commerce and customer engagement in

Chinese market

Segmentation, Targeting & Positioning

Market Analysis & Segmentation – Who is/are the market?

Age (social life style) and income (elastic demand) are 2 fundamental factors in fashion

consumption power. In general, Indian market is considered favorable for fashion.

Age structure ➢ Average population age is 28-29, with more than 65% below the age of 35 (18-36

represents about 30%)➢ About 75% of the Internet users are at age of 15-34➢ Young population are more influenced by consumerism trends

Market Analysis & Segmentation – Who is/are the market?

Income improvement➢ GDP per capita tripled over the past decade; more growth expected ahead➢ The middle class is around 19% and expected to be 41% of the population by 2025➢ Aspiring middle class and increasing prospering urban dwellers have been contributing

in the growth in fashion consumption

Market Analysis & Segmentation – The market's behaviors

Fashion covers apparels, accessories, footwear and etc.

What does the market buy?➢ Comfortable and fashionable➢ 98% of men's wardrobes are dedicated to western

apparel, compared to 75% for women➢ Younger consumers more influenced by fashion;

older consumers more likely to purchase basic

comfortable styles➢ Willing to pay higher prices for quality and/or

natural fibers➢ Different apparels for different activities

(Charts from http://www.cottoninc.com/corporate/Market-

Data/SupplyChainInsights/Global-Lifestyle-Monitor-India/)

Market Analysis & Segmentation – The market's behaviors

When does the market buy?➢ 47% plan for apparel purchases, less than 18% shop for apparel at least once a

month, compared to global average of 41%➢ 38% buy apparel for special events, higher than other emerging economies

Where does the market buy?➢ Unorganized retail stores or street markets still more popular➢ American-style shopping malls are emerging➢ Online for lower prices and better deals

Why does the market buy?➢ Increase in disposable income➢ Lifestyles of prospering urban consumers evolved, clothing needs broadened,

more varied usage occasions (ex. social activities)➢ Fashion becoming self-expression, 62% said important to “keep up with trends”

Market Targeting – Who is/are the target audience(s)?

Since Snapstyle social-commerce is focusing on fashion and is highly associated with

people's online social activities, it will make more sense to start the 1st phase with the so

called “extreme users” in product development strategy – more urbanized younger

crowds. A broader target audience of young population will be reached in the 2nd phase.

1st phase: men and women of age 20-29 in big cities who favor western styles➢ Men and women represent about the same market share➢ Significantly more involved in social media➢ More influenced by fashion trend➢ Many pop influencers (ex. bloggers) in this segment

2nd phase: men and women of age 18-36 in all sorts of cities for all styles➢ Represents about 30% of total population➢ Still more influenced by consumerism trend➢ Different life stages and lifestyles bring in needs of wider product variety➢ Fashion consumption in smaller cities is growing more quickly

(Competitive strategies from left to right: Flipkart/Myntra, Snapdeal, goal of Snapdeal)

Flipkart/Myntra is now the leader in fashion e-tailing. Comparing Flipkart and

Snapdeal, Flipkart excels more in customer intimacy with its social shopping and

consumer engagement. Social networking and community engagement are highly

efficient in information dissemination and very aligned with Snapdeal's goal to build “a

brand for daily lives.”

Market Positioning – Proposed brand positioning

So Snapstyle is positioned to gain customer intimacy (traction, viscosity) via buyers and

sellers' online social activities following purchases for real life events.

“Always fashion for your daily life.”

The principles are:

➢ Snapdeal – A discovery platform, a brand for daily lives➢ Snapstyle – Fashion rooted in daily lives (more customer-intimate, different from

Flipkart/Myntra's style and trend led approach)➢ Mind Share – Wallet Share – Market Share – Market Dominance➢ Bring real life's offline experience to the connected online communities

Market Positioning – Proposed brand positioning

Market Positioning – Communication objectives

The approach of Snapstyle itself is a way to social, communicate and advertise.

Following the positioning principles, the goals and objectives of communications are:

➢ Connect shopper communities with purchases for real life stories (authenticity,

transparency, engagement, ownership, trust)➢ Connect sellers and shoppers with post-purchase continuous communications (seller

brand personality, humanization, virtual/real world synergy, ownership)➢ Virtual monetary rewards on social and referral efforts (silver lining pricing, treatment

effect on buyers, selection effect on referrals, network effect)➢ Shoppers' shopping credits applied to sellers' individual and capsule promotion

events (seller brand personality, ownership)➢ Closest-level engagement to create market traction for both buyers and sellers

Market Positioning – Communication actionable items

Actionable plans to achieve communication goals and objectives:

➢ First work with fashion bloggers who are known for being the guys/girls next-door or

budget-conscious shoppers to set up content standards and raise awareness of

Snapstyle social-commerce among their followers➢ Collaborate with participating sellers to curate looks that reflect the bloggers'

current life events to enhance customer-intimacy➢ Promote the looks, retailers and Snapstyle profiles to their followers

➢ Work with sellers and assist them in communication to build brand image➢ Interact with bloggers and their followers first

➢ Open Snapstyle to general shoppers with rebate shopping credits as key incentives➢ Hand-picked shoppers first, then general shoppers later➢ Assist sellers to utilize this individual promotion mechanism

➢ Routine monitoring on social activities and content generation➢ Continuous collaboration with more fashion influencers

Market Positioning – Interface – core content for mobile & web

Celebrating my birthday

on Good Friday! - User123Dress: Besiva Red Cotton Dresses

Neckpiece: from mom

Bracelets: assorted

Watch: Aldo

Belt: Lino Perros Thin Black Belt

Shoes: old

Besiva: Dear User123, thanks for

shopping with us. Happy Birthday!

User456: Love how the skirt flows

User789: The belt really accentuates your

waistline

(Picture from blog http://www.head2heels.co/)

Market Positioning – Interface – mobile QR code

(Picture from blog http://www.head2heels.co/)

Buyers can post a look based on the life events they

dressed up for and how to mix-and-match the

outfit in brief sentences. They can show where to

buy the items on Snapdeal, share it on social media

or bring up QR code for in-person sharing.

Other people can check or scan to favorite this

look. And then browse, click the links to purchase

or follow this buyer or join the circle(s) s/he is in.

Sellers can also interact with this buyer when they

are being promoted by him/her. A way to build up

sindividual brand identity, ownership and traction

on the multi-brand platform.

Operations Plans

Operations Plans – Plan for cost, quality, variety and responsiveness of the new line

Channels to distribute Snapstyle social-commerce can be planned for 3 phases:

Introduction (influencer generated content)➢ Initial influencer-led community promotion for their own Snapstyle profiles➢ Snapdeal-led awareness campaign of on-site influencers on social media➢ Snapdeal-led pilot sellers recruiting and onboarding

Growth (influencer and buyer generated content)➢ Notifications to prompt buyer to share and refer➢ Snapstyle select award to raise awareness, engage and educate buyers➢ Routine guest influencer-led profiles and promotions to maintain awareness➢ Distribute personalized, community influenced fashion/style guides via

notifications to engage Snapstyle communities ➢ Distribute analytics and stories via emails and other means to engage and recruit

sellers


Channels to distribute Snapstyle can be planned for 3 phases (cont'd):

Mature (majorly buyer generated content)➢ Distribution channels here are mostly the same as growth stage. The difference is at

growth stage more work will be done manually for research and machine training.

When customer behaviors are better understood, many process shall be automated

to lower the costs and ensure quality, variety and responsiveness.

Operational plans can be divided into 4 phases:

Pre-introduction

➢ Form Snapstyle team of product managers, engineers and UI/UX designers➢ Heavy research➢ Platform development and dogfooding/testing➢ Bring in pilot sellers and influencers➢ Setup customer support policy, process and workforce


Operational plans to can be divided into 4 phases (cont'd):

Introduction

➢ Release influencer profiles, start hand-picked buyer profiles➢ Snapstyle team, regional fashion teams and customer support will closely monitor

communications and activities➢ Iterate: feedback – improve – deploy (for technology, UI/UX design, governance)➢ Continue to bring in more buyers, sellers and influencers➢ Train machine learning modules using user-generated content

Growth (influencer and buyer generated content)➢ Wide open to general buyers and sellers to use Snapstyle social-commerce➢ Mostly the same as introduction stage, but more customer support workforce will

be needed when there are more buyers and sellers

Mature (majorly buyer generated content)➢ Mostly the same as growth stage, but as more rules are settled and automated, the

team can start focusing on new goals

Financial Plan

Financial Plan – Estimate of costs and revenue for the new line

Here are the rules of Snapstyle program commission rules:

➢ Buyers get Rs30 shopping credits if they share the look on Snapstyle profile➢ For every referral purchase via the link associated on Snapstyle profile, buyer gets

10% of sales price in the form of shopping credits➢ Seller decides which products to promote; instead of direct discount seller takes

shopping credits from buyers as discount➢ Seller decides the upper limit of shopping credits applicable on each promotion item ➢ Snapdeal gets 5% of after credit after discount sales price as final value fee


Buyer's example:

➢ Share a look of a dress cost Rs1889 after discount, get Rs30 shopping credits (Rs30)➢ Someone buys via the link, additional Rs189 (Rs219)➢ Another person buys via the link, additional Rs189 (Rs408)➢ Share another look of Rs3329 item, get Rs30 shopping credits (Rs438)

Seller's example:➢ Promote and set to take up to Rs800 shopping credits on a Rs2205 dress➢ Buyer applies Rs438 shopping credits and pays Rs1767➢ Snapdeal charges commission Rs1767 * 5% = Rs88


As e-tailing is undergoing fast growth and competition, numbers are constantly

changing. Here are some Snapdeal's base numbers for financial estimation:

➢ About 32% marketshare of $6.3B online retail market➢ Total retail market is growing at ~50%➢ 17.9 million monthly active users➢ Fashion makes up around 35% of all sales and 55-60% of transactions➢ 2600 employees, $20-30 million operation cost per month ➢ Apparel typically has 35-50% margin➢ Retailers get between 5-20% as margin


Revenue stream at growth stage based on the base numbers:

➢ First launch will take 6 months to get ready, and the retail market would increase 25%➢ $6,300,000,000 * 1.25 = $7,875,000,000

➢ If Snapdeal's market share and fashion category share stay the same➢ $7,875,000,000 * 32% * 35% = $882,000,000

➢ If after introduction stage, 10% sellers sign up with 10% of their products, GMV is➢ $882,000,000 * 10% * 10% = $8,820,000

➢ If 80% products are sold at an average of 25% off with shopping credits, the

commission total is➢ $8,820,000 * 80% * 75% * 5% = $264,600

➢ Operation cost per month per employee➢ $25,000,000 / 2600 = $9615

➢ Initial team of 8 (6 engineers 1 product manager 1 designer) for 6 month will cost➢ $9615 * 8 * 6 = $461,520➢ Annually $923,040


At introduction stage the annual operation cost will be 3.5X of the commission revenue➢ Commission revenue (10% sellers 10% products) = $264,600➢ Annual operation cost of a team of 8 = $923,040

If 50% sellers are willing to join Snapstyle program, with other estimates remain the

same, the commission revenue will be $1,323,000. If all sellers are participating in

Snapstyle program, with other estimates remain the same, the commission revenue will

be $2,646,000.

The number is more on the conservative side as retail market growth is not further

compounded in the calculation, more product and service categories will be added in

addition to fashion and network effect is not considered here. Workforce should grow at

a lower rate as automation is an important factor to scale up.


Other future possible income resources:➢ More user-generated content

➢ More precise insights for sellers➢ Better seller education program

➢ Connect influencers and sellers to simplify collaboration advertising process➢ Expend the platform for service providers (stylist, makeup artists, photographers)

More importantly, when the market traction is created, it will become easier to: ➢ Recruit and retain buyers, sellers and service providers➢ Cross sell➢ Maintain high brand values➢ Charge higher for effective advertising

Integration & Evaluation

Timetable of Activities

The time table to launch introductory bloggers' profiles and promotions:

1st month➢ Elect leadership and set up product road map➢ Kick off market and customer research➢ Form the team and set up collaboration plan

2nd – 3rd month➢ Iterate to design, build and test the system➢ Continue on market and customer research➢ Recruit influencers and sellers, prepare for content

4th – 5th month➢ Iterate to adjust, design, build and test the system, start dogfooding➢ Review with influencers and sellers, prepare for awareness campaign on social media

6th month➢ Start releasing initial influencer profiles and promotion, monitor activities➢ Iterate to adjust features and fix issues, kick off planning for next stage➢ More market and customer research to bring on first buyers

Evaluation

The goals and objectives of Snapstyle social-commerce is to increase:➢ Purchase sharing and referrals➢ Referral conversion➢ Buyer-buyer interaction➢ Buyer-seller interaction

So the success will be evaluated upon these goals. Data can be collected directly on the

platform. Analytics can be done to measure the rate of sharing and referrals, compare if

there is higher conversion rate by referrals. Use both text learning algorithm and human

mind to determine content quality. Analyze if interaction (comments) will increase

conversion rate. Also send out surveys to get user experience feedback. For all analytics

above, the higher scores the more successful it is.

Evaluation

The biggest assumption that can fail is that people don't want to share on Snapstyle

profiles. So in the timetable a research-first and agile approach is planned to keep

iterating over user feedback. And the soft open with influencers and hand-picked pilot

sellers are also planned to ensure iterations over small steps so that, if any will fail, fail

early and small.

Another possible scenario is the social-commerce function are being maliciously used

for spams, intellectual property infringement, personal attacks, etc. So close monitoring

will be needed at the early stage to help build up automation to detect improper

activities with better responsiveness

Snapstyle Social Commerce for Snapdeal India

Business

Transcript of Snapstyle Social Commerce for Snapdeal India