As Groupon’s business in India continues to hit snags, a homegrown daily deal company is quickly snatching up market share in the local deal space. New Delhi-based Snapdeal.com, which, like Groupon features daily deal coupons at discounted rates, announced today that it has raised $40 million in series B funding from Bessemer Venture Partners, along with contributions with existing investors Nexus Venture Partners and IndoUS Venture Partners. According to Snapdeal Founder and CEO Kunal Bahl, this is the largest single round of private investment in an internet company in India to date.
Snapdeal’s new round adds to the $12 million it raised back in January from Nexus and IndoUS, bringing total investment to $52 million. To see a sizable series B from existing investors come so soon after closing its series A is somewhat unusual. Of course, when you consider that Snapdeal has grown its 300-person staff to 500 and jumped from 1 million to 8 million members over a matter of six months, one starts to understand why. Snapdeal is scaling quickly, and this new infusion of capital will likely give it the cushion it needs to continue pushing into new markets.
With Snapdeal operations now extending across 50 of India’s largest cities and 10,000 brands and retailer partnering with the daily deal site, prospects are good. What’s more, according to Snapdeal Founder and CEO Kunal Bahl, the startup is currently averaging 1.5 million new members per month.
Part of the reason the site has been able to scale so quickly, Bahl says, is that half of the deals currently featured on Snapdeal are inbound requests from merchants. This has significantly reduced sales cycles for Snapdeal, and with its new capital in tow, Snapdeal plans to continue expanding into hyperlocal markets across the subcontinent.
While the CEO says that it has typically been difficult for Indian companies to scale, due to environmental friction and viscosity as well as low employee loyalty (and just, by and large, skepticism of new, untested companies) — and that Snapdeal, too, has struggled with these obstacles — the team has been able to gain from these experiences and is now seriously considering more international opportunities in the greater India region, like, for example, South Asia and proximate parts of the middle east and southeast Asia.
Another reason for the site’s rapid growth in 2011 comes from its recently launched products deals business, which is similar in scope to that of Gilt Groupe, in which Snapdeal sells branded lifestyle products, like fashion accessories, electronics, apparel, etc. at significant discounts. Since its launch 3 months ago, the products business has been doubling each month and now accounts for 15 percent of Snapdeal’s total business, Bahl said.
Mobile commerce is also proving to be an asset for Snapdeal, as 30 percent of its members access deals on their mobile devices. As the site allows its customers to receive daily text alerts (or emails), many of its customers are accessing deals on the go. And as a result of this rapidly scaling online and mobile customer base, Bahl said that many national and international brands have begun partnering with Snapdeal as a means of accessing new Indian customers. Levi’s, Pizza Hut, Nike, Marriott, and Hyatt Hotels, for example, are among those hopping on board.
Bahl says that the company has plans to expand its staff to 800 by the end of the year, but scaling so quickly across a large geographical region and managing on-the-ground operations is no easy feat. It is allocating a good deal of its time to training and grooming its staff in the hopes of building not just a viral company, but a business that has long-term viability — and one in which employee retention is encouraged.
Though Groupon has made the most news in the local deals space, Snapdeal hopes that in offering more than single daily deals and by avoiding minimum thresholds, it can forge an alternative to the Groupon model and distinguish itself from the rest of the daily deals pack. So far, so good. Snapdeal is definitely one to watch. After all, a small village in India just changed its name to “Snapdeal.com Nagar”, after the startup helped install the village’s water pumps.
For more on building a big internet company in India, interested readers should check out Bahl’s post in Business Insider. It’s an interesting read.
Also check out Robin’s interview with the Snapdeal CEO here.