E-tailer war: Snapdeal to boost logistics spend even as rival Flipkart ties up for easing license of foreign brands

Online marketplace Snapdeal, backed by Japan’s SoftBank Group Corp and others, has said it will boost spending on logistics and technology to better compete with rivals Flipkart and Amazon’s Indian unit, its co-founder said on Monday.

Even as Snapdeal is preparing to invest more in logistics, e-tailer rival Flipkart on Monday announced its tie-up with media venture Viacom 18 to ease licensing for foreign brands and make their merchandise accessible to Indian sellers at a click.

“Our latest initiative eases licensing process for foreign brands entering India and to offer branded merchandise to consumers at a click of a button,” the city-based e-commerce major Flipkart said in a statement.

Shopping online is becoming more popular in India due to the rising use of cheaper smartphones and e-commerce firms are struggling to cope with the growing demand and make faster deliveries in different parts of the country.

The e-commerce market in India is expected to grow to $220 billion in the value of goods sold by 2025, up from an expected $11 billion this year, according to a Bank of America Merrill Lynch’s recent report.

Flush with $500 million from a funding round in August, led by China’s Alibaba, SoftBank and Foxconn, Snapdeal is now looking to expand its services.

One area Snapdeal will focus on is to cut delivery times by investing in better data analytics and demand forecasting, co-founder Rohit Bansal told Reuters.

“We have done over 10 acquisitions and investments in the last one year, almost all of them in the field of technology or supply chain and payments,” he said. “With all these investments we have been able to reduce our delivery times by 70 percent in the last one year.”

Quick and cheap delivery is important to be able to win over customers in a competitive industry in which companies are burning through substantial cash to grow.

Snapdeal, which had $4.5 billion in Gross Merchandise Volumes (GMV), a measure of value of goods and services sold, by August, bought mobile wallet company FreeCharge in April for around $400 million.

It has also spent around $35 million to buy about 50 percent stake in logistics services company GoJavas.

Bansal said that Snapdeal had received interest in part of its stake in FreeCharge to raise funds for the mobile wallet company, but declined to comment further.

In October, the Economic Times newspaper said that FreeCharge plans to raise $300 million as the mobile wallet looks to expand its product range after receiving a specialized payments bank license from the country’s central bank.

“Our view is that in five years from today 10 percent of India’s consumption will happen online, not just products, but all consumption, and we want to build a technology ecosystem for that,” Bansal said.

For Flipkart, the tie-up with Viacom, a joint venture between the US-based media firm and Mumbai-based Network 18 media group, will facilitate licensing of international brands like Teenage, Mutant Ninja Turtles, Spongebob Squarepants and Peanuts to sellers.

“As overseas brands issuing licenses through offline face challenges in sales reporting and quality control, our online licensing will simplify the process to connect them with sellers on our e-platform,” Flipkart head for seller ecosystem Manish Maheshwari said in the statement.

Flipkart also offers its sellers assistance programmes to help them manage their business better.

“We train first-time sellers to go online with their products, mobilise workforce, cataloguing, packaging and provide financial aid,” it said.

The eight-year-old e-platform enables about 80,000 sellers to market their products across 70 categories to over 50-million customers at competitive prices and discounts with goods delivered at door stop.