Entrepreneurship Industry News

Learning From The Snapdeal Saga

I have been tracking the Snapdeal drama with a lot of curiosity, because I am an angel investor in Primaseller, a startup which enables merchants to sell online. How could a company which was worth billions of dollars have come to this sad pass? What went wrong?

And while some people will experience schadenfreude and gloat over “how low the mighty have fallen” and ” this episode just proves how clueless Indian VCs are”, the lessons we need to learn go far deeper.

Snapdeal was a promising company which had the advantage of being an early mover in a hot space. It had a great opportunity to change the way Indians shop because it was one of the first e-commerce players. This was an exciting new area, and by allowing small retailers to sell online, it offered them the ability to reach out to far more customers.

This made a lot of sense, and many observers started predicting the doom of brick and mortar stores such as Big Bazaar. The hope was that shopping would become much more efficient, and that Snapdeal would become the Indian Amazon.com. By allowing merchants to connect with their customers online, the overheads which are traditionally associated with small stores who have a limited reach would be eliminated, allowing retailers to benefit from economies of scale and centralisation.

This would have been a huge step forward, but unfortunately all that promise went up in smoke.

This caused a lot of harm as well, because the younger, more progressive retailers, who were willing to experiment with these new online channels, burnt their fingers by signing up with Snapdeal.

They had a terrible experience, because though Snapdeal was supposed to be a technology company with a mature platform which enabled merchants to sell online, the truth was that their technology was broken. Even though they employed an army of engineers, they kept on changing their design, and their APIs were unstable and broke all the time.

PrimaSeller is an inventory and order management platform for merchants which allows them to manage their sales across multiple online and offline channels.

It serves as a retailer’s dashboard, by allowing them to reconcile their stock across many physical and online shops, so that they can sell on multiple different platforms, including Amazon, Flipkart and Snapdeal. However, Primaseller’s experience with Snapdeal was terrible, because their APIs never worked properly, and they never respected their partners. The merchant was not able to sell efficiently, and Primaseller received all the flak, for no fault of theirs.

They finally gave up on the Snapdeal platform as a lost cause, but Snapdeal was always secretive about the problems which they were having. They promised to fix these on a priority basis, but their technical debt got to such a point that they were never able to overhaul their broken system. The technology was never given the importance that Amazon gives to its engineering.

Their culture was that of a hustler, and often their merchants got the raw end of the deal – and their customers suffered as well.
The same problem plagued Unicommerce as well after Snapdeal acquired it. They bought Unicommerce, a Primaseller competitor, in order to be able to provide an end-to-end solution for retailers, so that they would be able to sell seamlessly on Snapdeal as a platform. Sadly, this never worked well either, perhaps because Unicommerce was treated as a stepchild after the acquisition.

By sticking to its core competence, Primaseller has managed to solve these problems, so that it has been able to delight merchants all over the world. However, because so many Indian retailers have such unhappy memories of their experiences with Snapdeal, they remain very reluctant to try alternative solutions, even though these work well, because of the ” burnt child dreads the fire” syndrome. This misadventure has retarded the progress of online shopping in India considerably.

My next piece will provide more details about these technical issues, and how this space is likely to evolve, based on the lessons we have learned.

Read more: Bizztor