Is Interest in SnapDeal Waning?

SnapDeal’s popularity had been soaring for the last year that at one point it even overtook the mighty Groupon briefly. But traffic in the last ninety days and particularly the last month suggests otherwise. Is the hype finally dying? Is it the result of an overkill of daily e-mails spamming our mailboxes?

While it’s true that many deal sites are showing a downwards trend, some of the top ones including SnapDeal and DealsAndYou have shown a drastic drop. From being one of the Top 20 sites in India, SnapDeal’s rank is now languishing at 50. This trend is not true of all deal sites – some of them have actually improved their traffic like Koovs (but this is mainly due to recent infusion of capital).

Graphs showing SnapDeal's downward trend

There might be a boredom combined with exhaustion setting in among deal hunting online users. The sheer amount of spam from subscribing to various deal sites is burdening users. Could it be that the popularity of deal aggregators have affected their traffic. But, more importantly has it affected the number of transactions or sales volumes?

Or perhaps, it’s because of market saturation. Here’s an example. Assume that there about a 1,000 people who want to hit the spa this week or are vaguely interested. There are about 15 deal sites which are offering multiple deals from about 50 spas and salons across the city. These deals will get snapped up based on the proximity of the place and availability of a suitable and usually inconvenient time since the peak hours are reserved for walk-ins or ‘regulars’ who pay the full price for the services. See the problem here. There’s an equilibrium that comes into play in this supply-demand chain. There are only that many deal subscribers who want a particular type of deal and a fixed number of merchants to offer them. And there are way too many deal sites who are all scrambling for limited number of customers.

Most of the daily deal and group buying sites in India are clones. Incidentally, many Indian portals try and replicate a successful and proven business model in the US. Sure, credit must be given that the Indian daily deal start-ups have kept many major players at bay and made them play second fiddle. But, the pace with which innovation is happening on the web is just stupefying. That applies in the Indian context as well. None of these companies are actually innovating on the business model (Groffr might be an exception). Adding more subscribers and new merchants alone wont suffice to stay alive in this cut throat market. Complacency may not set in actively. But, lack of innovation will do exactly that.

Time and time again, we have seen new start-ups taking on the biggies and out smarting them. The time is ripe for a new entrant which could give these deal sites a run for their money.