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Business News/ Companies / News/  Snapdeal expects online auto sales to touch Rs1,000 crore
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Snapdeal expects online auto sales to touch Rs1,000 crore

Firm ties up with Hero MotoCorp to sell two-wheelers, expects automobile category to generate `1,000 crore in six-ten months

Snapdeal.com gets Rs15 crore of business in the automobile category currently in terms of gross merchandise value (GMV), or the value of goods sold on the sitePremium
Snapdeal.com gets Rs15 crore of business in the automobile category currently in terms of gross merchandise value (GMV), or the value of goods sold on the site

New Delhi: Snapdeal.com, an online marketplace, on Thursday announced a partnership with Hero MotoCorp Ltd to sell the company’s two-wheelers and expects its automobile category to generate 1,000 crore of business in next six to 10 months.

Snapdeal.com, run by Jasper Infotech Pvt. Ltd, gets 15 crore of business in the automobile category currently in terms of gross merchandise value (GMV), or the value of goods sold on the site. The company expects to close the fiscal year ending March 2015 at 300 crore GMV from the auto segment.

Tony Navin, senior vice-president, Snapdeal.com, said the company is in talks with at least three more two-wheeler companies to take their products online in the next three to four weeks. Taking more four-wheeler brands online on its platform is also on the cards. He declined to share details as deals with the automobile firms are yet to be inked.

Snapdeal, which started selling automobiles online nearly a year ago with motorcycles and electric scooters, has sold 700 Hero motorcycles since 10 December. “This is the first time we tried out the online platform for selling our bikes and the response has been phenomenal," said A. Srinivasu, head of national sales at Hero MotoCorp.

Hero MotoCorp tied up with Snapdeal during the recently concluded Great Online Shopping Festival (GOSF) and sold several models of motorcycles, including its best-selling Splendor, Passion, Glamour, Ignitor, Hunk, Xtreme as well as Pleasure, its scooter. The pricing was the same as it is offline.

Snapdeal currently sells Mahindra and Mahindra Ltd’s Scorpio SUV as well its motorcycles and scooters. The website claims to have around 80,000 auto parts and accessories in its selection as well.

According to Navin, many places in India do not have auto dealerships. “So people find it convenient to order online. It is an incremental revenue for auto companies, too, since they get orders from small towns where they might not have a presence."

Honda Motorcycles and Scooters India Pvt. Ltd (HMSI), too, recognizes that the changing demography of India has increased the potential for online sales. “We are keenly studying the consumer trends while maintaining a win-win situation for our own customers and profitability of existing brick and mortar dealership," said Y.S. Guleria, vice-president (sales and marketing), HMSI, when asked about the company’s plans to sell via shopping portals.

Still, not everyone is convinced.

Rakesh Srivastava, senior vice-president (sales and marketing) at Hyundai Motor India Ltd, said that digital media plays a key role in information dissemination. Currently, the company uses the digital platforms for integrating customers with channel partners (Hyundai dealers) for sourcing information on products and services. As for online sales, Srivastava seemed to suggest he wasn’t convinced: automobiles are high-value, lifestyle products where touch and feel is a pre-requisite for ownership, he said, and added that the company is “studying the evolution of this (online) platform".

Jnaneswar Sen, senior vice- president (marketing and sales), Honda Cars India Ltd, echoed that sentiment. “People do online surveys and comparisons before making buying decisions, but they want to touch, feel and test drive the car."

And the market leader in the passenger car segment, Maruti, is downright dismissive of the online platform. Its own sales and service network is enough to penetrate deep into the market, a company executive said on condition of anonymity. A Maruti spokesman declined to comment.

Flipkart, Snapdeal’s larger rival, said it had no plans for the automobile category.

Snapdeal posted loss of 264.6 crore on revenue of 168.1 crore in 2013-2014, according to the documents filed with Registrar of Companies.

The company was valued at close to $1.76 billion after the SoftBank Group’s $602 million investment in October. The SoftBank Group, the largest shareholder in Chinese e-commerce company Alibaba Group Holding Ltd, recently led a $627 million investment in Snapdeal, making it the largest shareholder in the e-retailer. Snapdeal currently claims to offer more than five million products across 500-plus categories on its platform, with more than 25 million registered users and 50,000-plus merchants.

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Published: 19 Dec 2014, 12:28 AM IST
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