SnapDeal Raises $12 Million From IndoUS And Nexus Venture Partners

With Groupon’s entry and eBay’s foray into group buying it was only a matter of time before we saw some activity from SnapDeal.  The group buying site which recently disclosed that it has saved its customers over Rs.5 Crores since its inception has closed a Series B round of funding in which it raised $12 Million from Nexus Venture Partners and IndoUS Venture Partners.

In mid-2010 the company acquired Grabbon and has hinted that some more acquisitions could be on the way. It has reportedly set aside $2 Million for domestic acquisitions. It is also looking to expand from its current footprint of 5 countries and considering acquiring its way into Malaysia, Indonesia, Philippines and Thailand. It is also looking at expanding its present operations and according to VCCircle, is aggressively hiring to fill top management positions.

In an interview with TCTV, Jasper CEO Kunal Bahl said SnapDeal had about 70% of the Indian group buying market. A recent article in afaqs! pegged the number of active daily deal sites in India at around 20 with many more to come. It also looked at the unsustainable nature of these sites in the long run. It calculated the net amount of money brought in by all of them at about Rs. 1.5 crore in a month – assuming a 15% average commission. Many experts suggest this amount of income isn’t enough to match all the costs of running such a business. The tail isn’t looking so long at the moment.

As appealing as the business models sound, there is definite pressure on many of the group buying sites. Groupon on the other hand operates on 50% revenue sharing model with the merchant – giving it much better margins than some of its Indian counterparts. Whether it is able to continue demanding such percentages around the world is a different matter.

How do you see this space unfolding in the coming months? Is a consolidation in the offing this year? Let us know what you think!


Source: Watblog