The world of e-commerce has traditionally been led by premium brands, which offer predictable quality, but at high prices. Users who shop on a budget desire the same convenience of good, predictable quality, but at prices that are relevant to them.

Snapdeal is focused exclusively on the value segment. As it doubled down on its efforts to expand the availability of value merchandise on its platform, it realized that the supply of such merchandise is both fragmented and under-organized, making it difficult for both sellers and buyers to offer and discover value merchandise seamlessly.

Snapdeal’s ‘Power Brands’ program seeks to aggregate and deepen the availability of value merchandise for both online and offline users. IndianRetailer’s Charu Lamba spoke to Himanshu Chakrawarti, President, Snapdeal, on how Snapdeal's Power Brands program is organizing India's value merchandise to fulfill the demands of expanding customers in Tier II and III  cities.

Value on the Rise 

E-commerce in India is growing and evolving rapidly, led in large part by the huge rise in the number of Internet users and the growing number of value-conscious online shoppers. The 2010s were about getting affluent users from metros and Tier-I cities to shop online primarily for brands. But today, e-commerce is looking at Tier-II and III cities for future growth. 

These cities aren’t just catching up with the metros – they’re outpacing them; compelling e-commerce companies to focus on serving the needs of mid to low-income, budget/value-conscious users.

According to the Kearney report, while only 4 percent of the value demand is served online, this proportion will rise sharply to reach 19 percent by 2030 led largely by categories like apparel, footwear, fashion accessories, cosmetics, small appliances, home, and living. 

Serving the Value-Conscious Customers

Value-conscious buyers focus on finding affordable products that meet their needs of desirable quality, durability, and trendiness. However, value shopping is not about cheap products of indifferent quality, but about well-priced products of good and predictable quality.

Over the last decade value retailers like Max, Zudio, Decathlon, D’Mart, etc have built large businesses to serve the value-conscious consumers in modern format retail. However, an equivalent of these has largely been missing from the world of e-commerce, which has been dominated by big brands that offer predictable quality but at high prices. 

Snapdeal saw an opportunity in the aggregating supply of affordable and  good quality merchandise to meet the needs and expectations of  a large cohort of nearly 170 million mid-income households

Snapdeal’s ‘Power Brands’ Program

Budget shoppers want the consistency of quality generally associated with brands, but at costs that are within their reach. "Snapdeal is working on how to bridge the gap of value-conscious shoppers online by carefully integrating the two most critical criteria for a value-shopper - quality and price," stated Chakrawarti.

To do so, Snapdeal created ‘Power Brands’ wherein the brands have been developed by Snapdeal, and are licensed to a select network of sellers on the basis of their capabilities to consistently offer good quality products at affordable prices. Snapdeal owns the brand IP, and the sellers and manufacturers – who sell under the brand name owners and manage the inventory.

Snapdeal carries out a range of activities starting with sharing consumer insights with sellers and manufacturers, providing guidance on product features sought by users, product packaging good practices, etc. Snapdeal, today has 13 Power Brands across popular categories like apparel, fashion accessories, footwear, home and kitchen, health and wellness, personal grooming, etc.

Building What Customers Need

Snapdeal uses data sciences and technology to capture and understand the preferences and needs of a wide and heterogeneous customer base through its ‘Customer Insights’ program. This customer-centricity helps Snapdeal curate products that incorporate category nuances aligned to the needs of value shoppers. For example, ‘Hometales’, a popular Snapdeal Power Brand for home and kitchen products,  offers plus-sized bed covers to cater to non-standard sizes. Other consumer insights included in power brands include wallets with large coin pockets, fast charging cables, performance T-shirts with sweat-absorbent properties, trimmers, and neck bands with longer run-time per charge.

By adding differentiated features to popular products as per user needs, Snapdeal’s Power Brands directly address the unfulfilled needs of users. The users pay for the features and functionality that they need and not for brand premiums. 

Win-Win for All 

Snapdeal recognizes that many MSMEs have great manufacturing or sourcing capabilities, but increasing their reach and access to newer markets remains a hurdle. This is further compounded by the need to build brands in order to stand out and build consumer loyalty.

"With no brand creation costs, sellers can concentrate on their core skills of production, sourcing, and price intelligence, resulting in increased cost-efficiency,” Chakrawarti said.

“The program provides buyers with a variety of relevant, high-quality options, with prices based on functional value rather than brand premiums. Merchandise offered under Power Brands tends to get good customer ratings and reviews. This further encourages other shoppers to explore the brands and buy the products and also has more sellers looking to participate in the program,” he added.

Going Forward

Power Brands are designed to help strengthen and organize the ecosystem for value sellers in the country. Snapdeal’s collaboration helps sellers with ready access to well-designed brands aligned with users' needs.  It also expands access to a larger market for local sellers of unbranded products which are usually localized.

The demand for 'Power Brands' is growing within various categories and this is expected to scale up significantly as Snapdeal expands the products, categories, and number of sellers that it works with.

While Snapdeal’s home-focused brand Hometales serves a range of home needs from kitchenware to bed & bath linen, from gardening tools to wall stickers, and even items like gods and goddesses, cooking ware. It has also expanded its beauty and personal care category by launching Miyuki, a Korean-beauty-inspired makeup range, NORD deodorants.

Snapdeal’s ‘Power Brands’ program aims to bring structure, uniform look, and feel to unorganized categories. For long a chasm has existed between the world of premium brands bought by the affluent and a world of unorganized, largely unbranded, indeterminate quality supply that the budget buyers had to contend with. Snapdeal’s attempt to bridge this gap is well-timed for aspirational and aware shoppers who no longer agree that good quality comes only with premium pricing.