Mahesh Murthy Trolls Snapdeal’s Branding Overhaul, But Does It Actually Makes Sense?

Bart Eshwar

The new Snapdeal logo was unveiled today with much fanfare. There were full page ads in newspapers, press coverage, and the usual social media hype. The logo was well received in most quarters, with people saying it looks modern and slick. However, Seedfund founder Mahesh Murthy wasn’t impressed.

Ouch.

Murthy is likening the logo redesign to “a paint job on the Titanic”, implying that a logo won’t save the sinking ship that is Snapdeal. The argument does have some merit – Snapdeal, by most accounts, is now a distant third in the e-commerce battle, and is losing money on most orders. Its losses rose fivefold to Rs. 1,350 crore in 2015, and it let go of 600 employees last year, leading to protests inside its office. In these circumstances, a Rs. 200 crore rebranding does sound extravagant.

But probe a little deeper, and a rebranding might make more sense than one realizes. E-commerce in India is fast getting commoditized. The initial discounts that companies showered upon users were meant to wean them off traditional retail and get them hooked to the idea of e-commerce. Once that mental switch was made, marketplaces have two elements left to compete on  – services and price. The discount frenzy can’t last forever; so in the near future, it’s very possible that most marketplaces will provide similar prices for products. If firms can iron out their customer service problems (and in Snapdeal’s case, that’s a big if), marketplaces will become uniform, relatively homogeneous entities.

And in such a scenario, marketplaces which have high mental recall and a distinct brand identity will triumph. Pepsi and Coke don’t compete on products any more; they’re more or less similar. What they compete on which superstar they can bag to promote their fizzy drinks. Similarly, e-commerce firms in India will compete on which one users first think of when they want to buy products online.

Granted, e-commerce in India isn’t quite there yet. Service levels vary across marketplaces, and many customers are faithful to brands based on their customer service alone. But if all three major marketplaces mange to survive the next five years, it’s very likely that marketplaces will become commodities. And once that’s done, the marketplace with the best branding will win.