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Last updated: February 13, 2017 at 12:44 pm

Is Snapdeal Firing 1000 Full-Time & 8000 Contract Workers? Desperate Days For Snapdeal?

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If this news is true, then it would be the biggest termination which Indian e-commerce has ever witnessed. As per conflicting reports coming in from various sources, it has been revealed that Snapdeal, India’s 3rd largest e-commerce portal, is all set to mass fire their employees to cut costs.

30% of their full-time employees working with their online marketplace business may soon get the pink slips, besides 8000 contract & full-time workers who are assigned with logistics and delivery. Out of this, 5000 contract employees are associated with Vulcan Express, which is their logistics subsidiary, and 3000 are full-time associates, working on the rolls of Vulcan Express.

As per various estimates, Snapdeal has around 10,000 employees working, both full-time and contractual, spanning various divisions. Hence, firing 90% of their workforce in a single go seems impossible as of now, but indications exist that the situation is indeed bad.

An unnamed executive, along with two consultants have said to TOI; “5,000-odd contract staff employed by the company’s logistics subsidiary Vulcan Express will be pared down as well as about 3,000 people on the rolls of the logistics company..”

Last year in the month of February, Snapdeal had put 200 employees under ‘Performance Review’ and then fired them.

Note here, that Snapdeal senior management had already sent an email to all managers to ‘right size’ their respective teams.

Snapdeal has, in a way, confirmed the termination exercise, but hasn’t revealed the numbers yet. In a reply to ET, they 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..”

Snapdeal’s Sorry Saga: The Reason For Terminations

After marketing and advertising, costs pertaining to employee salaries constitute the biggest share of Snapdeal’s expenses. And as per reports, a major investor in Snapdeal has stopped investments, until and unless this ‘expense’ is taken care of.

During FY2016, Snapdeal’s expenses related to employee salaries rose by 148%, to reach Rs 911 crore, as their total losses increased to Rs 2960 crore. (although their total sales also increased to Rs 1457 crore, which isn’t 56% growth.)

The signs of mass firing were evident since last few weeks, as some of the senior most management heads started making quiet exits. After Senior VP of Partnerships & Strategic Initiatives, Tony Navin quit last month, Senior VP & Head of the Consumer-to-Consumer Platform Shopo, Sandeep Komaravelly and Abhishek Kumar, Head of Corporate Development had also quit Snapdeal.

Shopo, their C2C platform for small sellers has already been shut down.

Snapdeal’s last investment happened in February 2016, when they raised some funds on a valuation of $6.5 billion. If we believe some reports, then the latest firing round is a precursor to another round of funding, which would be done at a 50% less valuation than last time.

Will Alibaba jump in and acquire Snapdeal this time? Is Indian e-commerce sector all set for another round of consolidation?

We will keep you updated as more details come in..

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