Hemant Bhardwaj, MD, Dunonu Retail
Snapdeal is one of the largest e-commerce firms in the country. Currently it is giving the brand its second makeover in six years. The company’s co-founder and CEO, Kunal Bahl, said in a statement that the objective of the Rs. 200 crore makeover was to get the next 100 million users on board.
The most significant change will be seen in the logo. The previously blue-white Snapdeal logo will now be vermillion and be depicted by two arrows forming a box. DesignStudio, a London-based design firm that has also designed the Air BnB’s logo, is responsible for creating it. The company will also be spending on various promotional events ahead of the year’s mammoth festival season. Since its inception in February 2010, this is Snapdeal’s second logo change.
Snapdeal has made this announcement at a time when online retailers are experiencing a sluggish market in Asia’s third-largest economy. Lately the sector has faced various issues like drying up of funds, huge layoffs and to top it all, not enough profitability. Snapdeal, which currently caters to more than 6000 cities and towns in India, lags behind its major competitors Flipkart and Amazon on most metrics. A study by Nielsen revealed that Indian sellers recall Flipkart and Amazon better than Snapdeal. Sanchit Vir Gogia, the chief analyst at Greyhound Research had mentioned in July last year that Snapdeal had been facing an identity crisis since a couple of years and also had been losing relevance at an increasing rate. This explains their need for a multi-crore makeover. But will this overhaul help Snapdeal?
‘Lipstick on Gorilla’
It is believed that the re-branding is like repainting the body of the Titanic – Makes it look better but it will crash nonetheless. It is unlikely that just changing the logo will make a huge difference. Customer acquisition is key but there is a wrong belief that marketing and endless advertising increases customer acquisition. There has to be better products and services on offer to attract a strong customer base.
Others are of the opinion that large spending on overhaul makes sense only if it is accompanied by something new and relevant that promises to change the game altogether. Simply put, the customer may not change his behaviour because of a brighter coloured box but he might change if he is promised a swifter delivery than Amazon or Flipkart. If the makeover is not accompanied but a substantial service change, it can prove to be quite wasteful.
With the festival season approaching, most e-tailers spend heavily on branding and marketing at this time of the year. October and November are the months when India celebrates a variety of festivals including big ones like Navratri, Dussehra and Diwali. Snapdeal’s sales grew around 700% during this period in 2015. But such kind of splurging has a down side too. In the financial year 2015, Amazon India posted a loss of Rs1,724 crore as a result of such heavy spending. Similarly, Flipkart reported a loss of Rs. 2,000 crore, while Snapdeal reported a loss of Rs. 1,328 crore.