Burgeoning snapdeal that had an explosive growth a target of overtaking gross sales of Flipkart last year is going through troubled times now as it started laying off its employees on Wednesday (23 Feb). Company’s co-founders Rohit Bansal and Kunal Bahl admitted that they made drastic mistakes in taking decisions and Kunal elaborated about it in a mail to his employees.
“We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth. Sadly, we will also be saying really painful goodbyes to some of our colleagues in the process. This is by far the hardest decision we have ever taken,” read the letter.
Further, it said, “We started growing the business before the right economic model and market fit was figured out. A large amount of capital with ambition can be a potent mix that drives a company to defocus from its core. We feel that is what happened to us. We started doing to many things and all of us starting with myself and Rohit, are to blame for it.”
It is learnt that to get back in the competition, Snap deal will shut all its non core business in a bid to cut costs, one of the major business being FreeCharge, Govind Rajan the CEO of which quit the company on Tuesday. Snap deal is now in talks with South-African based internet group Naspers to sell it for $300 million.
Following Kunal’s mail, about 100 people from marketing, engineering, catalogues, digital marketing and ad-tech teams were sacked from the office immediately and reports suggest that the company will lay off over 600 people in the coming few days. Overall job cuts are expected to be more than 1000 by the end of the trauma. A sacked employee told PTI that they would get three months of severance pay and that it was the only option on the table.
According to a report filed by Economic Times, the employees of the organization will not receive their salaries for an unspecified duration of time.
Snap deal lost major shares to Amazon and Flipkart when the domestic e-commerce market grew at 12 per cent to $14.5 billion. Also, one of its main investors, SoftBank written off its investments twice over last nine months. The company may now draw investments from Alibaba and FoxConn.
Stating their revival formula, the co-founders wrote in the letter, “It is uncanny similar for almost all of them- focus only on your core by stopping all non-core activities, reduce costs drastically and turn profitable as soon as you can, and use those profits to spur growth and new projects. We must do the same and there is no doubt that with the really smart folks in the company, we will make it something that we are very proud of.”