Snapdeal plans to layoff 1,300 employees, will assess resources

Priyanka Sahay

Moneycontrol

With an aim to cut costs, struggling e-commerce firm Snapdeal is likely to downsize its team by around 1,300 employees, a major chunk of which is expected to happen this week, according to two people privy to the development.

The segments which will be affected the most include marketplace health team from which around 38 people are being let go off. One of the people quoted above on the condition of anonymity said that this includes downsizing of the California team as well. Snapdeal had set up its data centre in California in May last year. The company has an estimated headcount of over 4,000 employees now.

Responding to a Moneycontrol query, a Snapdeal spokesperson said: "On our journey towards profitability, it is imperative that we continue to drive efficiency in our business, which enables us to pass on the value to our consumers and sellers. As in the past, and like all good companies do, we will continue to assess resource allocation in furtherance of our goals of enhancing customer and seller experience while driving high quality growth."

A bunch of senior level executives have already exited the company including Tony Navin, senior vice president of partnerships and strategic initiatives and Abhishek Kumar, head of merger and acquisitions and investments.

The move comes barely a month after Jason Kothari the former chief executive officer of beleaguered real estate startup Housing.com was parachuted into the company as its chief strategy and investment officer.

Kothari led the merger of Housing with rival PropTiger. In his nearly 15 month stint with the company, he was responsible for downsizing the team targeting operational inefficiencies.

He was then inducted into Snapdeal at a time when the domestic e-commerce companies including competitor Flipkart are struggling against the global rival Amazon which has announced a USD 5 billion investment for the India market.

Snapdeal is struggling to raise money and is reported to be in talks with existing investor Softbank to raise funds at a lower valuation.

Snapdeal almost doubled its losses to Rs 2,960 crore during the financial year ending March 31, 2016.

It had reported a loss of Rs 1,328 crore during the previous financial year. The revenue of the e-commerce major, rose to Rs 1,457 crore from Rs 933 crore during the same period of the previous financial year.

The company stood at a distant second position, during the festival sales that took place around Diwali last year in terms of number of units sold as compared to Amazon and Flipkart.

While Snapdeal sold 11 million units during the five day sale period, Amazon sold 15 million units, while Flipkart reported a sale of 15.5 million units.

This happened even as Snapdeal went through a massive brand restructuring and marketing exercise in September. It introduced a new logo and tagline. It also announced an investment of Rs 200 crore on 360 degree marketing campaign around the festive campaign.

Ironically, founder and chief executive officer Kunal Bahl, in an interview to Reuters, earlier this month, insisted that the company targets to become profitable in the next two years.

Snapdeal's comment

A recent media report about job cuts at Snapdeal is speculative, evident from the number of "un-named sources" quoted in the report. It portrays a distorted interpretation of our on-going efforts in pursuit of our well established goals of efficiency, experience and growth.