Snapdeal, which has just called off its merger with Flipkart, is going through a massive resizing. The struggling online marketplace now wants to run a leaner, meaner version (‘Snapdeal 2.0’) of the organization, and will lay off close to 80 percent of its workforce, ANI reports. A top official told the news agency that department heads were instructed to prepare a list of people who would be asked to leave. At present, Snapdeal has about 1,200 employees. If the Gurgaon-based firm goes through with its decision, it would be left with about 200 employees only.
This would be Snapdeal’s second major employee resizing. Last July, it had cut down its workforce from over 9,000 to under 2,000. It was one of the biggest layoffs in the India’s startup space. And earlier this year, it fired 600 more employees in a bid to cut costs; the founders as well as some top executives had to forego their salaries. “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 percent salary cut,” Snapdeal founder & CEO, Kunal Bahl, wrote in an email to employees. ALSO READ: Snapdeal calls off merger with Flipkart after several months of negotiations
Snapdeal’s cash struggles are now legendary. The company has seen its valuation erode from $6.5 billion to less than $1 billion in a year or so. A faulty business model coupled with rising competition from global giant Amazon, which is now India’s second-biggest e-commerce operation, ensured that Snapdeal kept falling. Its founders acknowledged to have committed “mistakes”. “We started growing our business much before the right economic model and market fit was figured out,” their February email said. ALSO READ: Axis Bank to acquire Freecharge from e-commerce company Snapdeal
Snapdeal has suffered so bad that at present its valuation is lesser than the overall capital it has raised from investors. For SoftBank that saw it as a marquee investment in India, losses in Snapdeal have reportedly crossed $1 billion. The Japanese investment giant was the chief broker of the now-failed Snapdeal-Flipkart merger. Snapdeal now has cash reserves of Rs 385 crore ($60 million) from Axis Bank to which it sold its payments unit, FreeCharge. It further looks to gain about Rs 100-120 crore from the sale of its logistics unit, Vulcan Express. There are no buyers yet. And given Snapdeal’s knack of dilly-dallying, that could take long as well.