Snapdeal's turnaround plan is working well, turns cash flow positive

In what could be termed as one of the remarkable turnarounds in the history of e-commerce market in India, online marketplace Snapdeal has achieved cash flow positive.

Snapdeal founders Kunal Bahl and Rohit Bansal, in an internal letter to their company's employees and their families, said that the company turned positive cash flow in the month of June this year.

"We have no current and future dependency on any external funding now," the letter outlined achieving milestone three months ahead of its time.

"We have been beating our projected goals for many months in a row, we have achieved it 3 months in advance" co-founders added. This makes Snapdeal one of the only Indian e-commerce firms to achieve this.

Last year after being engaged in strategic talks with rival Flipkart and other players, the e-commerce marketplace had put an end to sale saga announcing that it would continue as an independent entity and bring back Snapdeal (Snapdeal 2.0) on track with new commitment and focus.

Snapdeal Co-founder Kunal Bahl, then, aimed that they are profitable at a gross profit and about to make Rs 150 crore in gross profit in the next one year.

Jasper Infotech owned-firm had posted a loss of 12.6 per cent in revenue for FY17. Interestingly, the company’s total revenue stood at Rs 1,291.3 crore in FY17 from Rs 1,478.2 crore in the previous year.

However, Snapdeal’s  turnaround did not happen in a flick.

Last year was tough for the marketplace. Snapdeal had to sell, to shed its liability, Freecharge to Axis Bank. The deal was counted as one of the major losses for Snapdeal as compare to the digital payment company’s previous valuation.

Snapdeal also sold its logistics and supply chain Vulcan Express to Kishore Biyani’s Future Supply Chain Solutions in an all-cash deal. The company had to go through many cost-cutting measures including handing pink slips to hundreds of employees.

These measures helped Snapdeal bring down the monthly cash burn to zero from around $10 million in previous years. Currently, it is said to have around cash reserves of about Rs 800 crore.

Through Snapdeal 2.0, the firm aims to enable anyone to set up a store online, in just a few minutes, and focus on providing a large selection of products at great prices to consumers.

Now, with renewed strategy, Snapdeal claims that its order volume has increased to over 45,000-50,000, which is more than double of its previous figure.

Update: We have changed the headline.