Snapdeal has launched Snapdeal Gold, a service which will let its users get free shipping, next day delivery and extended purchase protection much like Amazon Prime, which was launched in India last month and Flipkart First, which was launched in June 2014. The difference is that while Amazon and Flipkart charge Rs 500 for their respective services, Snapdeal Gold is free for users. Flipkart had launched same day delivery service for goods sold by WS-Retail in April 2014.
Snapdeal Gold is limited to digital payments (credit cards, debit cards, netbanking and mobile wallets), and not cash on delivery, and is for 5 million products of the 50 million that Snapdeal claims to have. There’s also an extended 14 day return period for Snapdeal Gold orders.
Snapdeal’s logistics rollout
Earlier this month, the company opened 6 logistics centres in Delhi-NCR, Lucknow, Hyderabad and Kolkata, claiming that 80% of its orders were shipped through its fulfilment centres. Snapdeal currently has 69 fulfilment centres across India and offers next day delivery in 104 cities. It has 300,000 sellers on its platform.
Amazon Prime and fulfilment centres
– In February 2015, Amazon said that globally, Amazon Prime memberships had grown 53% year-on-year (YoY) in Q4 2014 and 50% YoY in the US. In the US, Amazon Prime comes bundled with Amazon Prime Instant Video which is an online streaming service with over 40,000 movies and TV shows, 1 million songs and 500,000 ebooks. It costs $99 per year.
– Last month, Amazon announced that it was building six fulfillment centres. In September last year, Amazon said that 90% of its sellers in India used the company’s warehouse and logistics services, and that the company nearly tripled its fulfillment capacity, compared with last year.
This is a good way of incentivising digital payments, given that the cost of doing cash on delivery is higher. Unlikely that competitors will follow suit, though, because they’ve already built paid models around free shipping and other value added services.