A day after SoftBank chairman Masayoshi Son called it the Alibaba of India, Snapdeal on Wednesday revealed plans to acquire technology companies on its way to clocking an annual rate of sales or gross merchandise value (GMV) of $3 billion by December.
Armed with a cash chest of $800 million — $627 million from SoftBank — Snapdeal also plans to hire over 1,000 techies and set up a development centre in Bangalore.
“This is a phase of acceleration and we want to make significant investments in technology in the next few years,” Snapdeal founder and CEO Kunal Bahl told HT.
GMV is the annualised value of merchandise sold on an e-commerce company’s website, which is generally considered a measure of growth. Snapdeal’s bigger rival Flipkart said early this month that it crossed $ 3-billion GMV and expects to touch $5 billion by March 2016.
Flipkart was the first Indian e-commerce company to cross $ 1-billion GMV in March this year, followed by Snapdeal. Online retailers are constantly revising their GMV projections upwards, a sign of the industry’s rapid growth.
However, companies are yet to make profits since they give huge discounts to bump up sales. “If we want to break-even we can do it in two quarters. But that is not the focus right now,” Bahl said. “We have so far spent $ 100 million and have 8-fold of that amount in bank,” he said.
He said the company would hire 1,000 engineers, taking its technology force to 1,500 by next year. “We are setting up our new development centre in Bangalore in the next two-three weeks. We will hire 500 engineers in Bangalore alone. Senior engineers from companies such as Yahoo are joining us,” Bahl said.
About the company’s plans to list on bourses, Bahl said: “Our board will continue to explore the right time to go public. I don’t think any of our investors would want us to go public in a hurry.”
“Be it SoftBank, Azim Premji or Ratan Tata, they all have long-term vision. SoftBank waited 16 years for Alibaba to go public,” he added.
Snapdeal currently has 30 million users and 50,000 sellers on its platform and aims to have a million small businesses selling on its site in the next three years, emulating the Alibaba model of providing a platform for scores of small traders and manufacturers. When asked about the feasibility of having a 20-fold growth on seller base in 36 months, Bahl said, “Two-and-a-half years back we had no sellers.”
About the fierce three-way competition among Flipkart, Amazon and Snapdeal, he said, “We are the fastest growing e-commerce company in the country. The SoftBank investment is a validation of that.”