Snapdeal, flipkart

On the heels of FreeCharge CEO Govind Rajan’s resignation this morning, fresh reports of Snapdeal planning to layoff as much as 600 employees have now surfaced on the interwebs. This report further adds to previous speculations of the e-commerce giant planning to shrink 30 percent of its workforce.

We had recently received a tip suggesting that Snapdeal is mulling the decision to part ways with a majority of its workforce. But, there were no credible sources available to verify the development. This report potentially builds upon the same and also provides us with an almost exact figure for the layoffs. It adds that the company has already started handing out pink slips to staff members last week itself.

Citing sources aware of internal developments, Economic Times reports that the layoffs at Snapdeal are happening across its primary e-commerce, logistics, and digital payment operations. This means the workforce will be slashed across levels from Snapdeal, Vulcan Express, and FreeCharge in the coming few days. The homegrown e-commerce giant currently employs close to 8,000 individuals.

On being questioned about the layoffs, a Snapdeal spokesperson said,

On our journey towards becoming India’s first profitable e-commerce company in two years, it is important that we continue to drive efficiency across all parts of our business, which enables us to pass on the value to our consumers and sellers. We have realigned our resources and teams to further these goals and drive high-quality business growth.

The aforementioned statement doesn’t exclusively state that Snapdeal is laying off employees but it does confirm the development. It, however, says that the unicorn startup, which was once recognized as a poster boy for the Indian startup ecosystem, is currently going looking to reorganize its resources and teams. The SoftBank-backed company is currently looking to conduct a reshuffling within the business operations. It is planning to cut down on additional expenses and adopt a much leaner and agile business model to reactivate growth. Speaking about the same, the spokesperson says,

As part of our overall path to profitability plan that is currently in full swing, we will be reorganizing the company into a lean, focused, and entrepreneurial one. We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth.

And to stay competitive against its e-commerce rivals, it is undertaking a consolidation drive that is aimed at making them profitable in a couple years. This not only involves laying off and merging parts of their teams but also acting responsibly towards the growth of the company. With regards to the same, reports of Snapdeal planning to slash the compensation of their employees by as much as 60 percent has also been confirmed. But, the exact figures for these reductions haven’t been mentioned except for the founders who are giving up their compensations. Talking about the same, the spokesperson further adds,

Many of our leaders have also stepped up proactively and offered to take a significant cut in their compensation, which is an excellent sign of how galvanised the team feels in this shared quest for profitability.

Further, Kunal Bahl has added,

We believe that every resource of the company should be deployed for driving us towards profitable growth and with this announcement, both Rohit and I are taking a 100% salary cut.

A couple weeks ago, Co-founder and CEO Kunal Bahl had already stated that “tough times were ahead” and Snapdeal needs to start working in this direction to bring in profits immediately. This development comes on the heels of surmounting losses, which were along the lines of ₹3,300 crore in the year 2016. This was the result of a disappointing 15 months for the company in terms of sales. Talking about their move towards profitability, Kunal had stated,

I see a relatively clear line of sight to (profit) and we have been making great progress in that direction also. We needed capital to build the infrastructure which we have, now we have to take control of our destiny.

Snapdeal has recently been plagued with an extensive cash crunch, very much like some other unicorn startups in the nation. It has been taking several cost-cutting as well as revenue addition measures, such as an increase in seller prices on their platform. These steps have resulted in operational optimization, with 25% and 35% reduction in delivery and company fixed costs respectively. And the decision to “right-size” their operations seems like a perfect piece of the jigsaw puzzle called profitability.

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