Black Day For Indian Ecommerce: Snapdeal Founders Admit Mistake, Confirm Mass Lay-Offs; YepMe Will Fire 90% Of Their Staff
The inevitable is now finally happening, right in front of our eyes.
The bubble of Indian e-commerce seems like finally bursting as Snapdeal, India’s 3rd largest e-commerce portal, and the poster-boy of Indian internet success story, as officially announced mass layoffs.
And the worst part: Snapdeal founders have admitted their mistakes of managing an e-commerce portal, and running after false numbers to get attention from VCs.
As per unconfirmed reports, Snapdeal may fire 800-1000 employees in the next few days.
Meanwhile YepMe, another ‘fast’ growing e-commerce portal may soon announce the termination of 90% of their employees in one single scoop. And in other news, Flipkart will reduce their office space by 50% to cut costs.
In several ways, February 22, 2017 would be remembered as the Black Day for Indian E-commerce.
Snapdeal Founders: We Made Mistakes, We Will Terminate Employees
In an email sent to all employees, Snapdeal founders Kunal Bahl and Rohit Bansal accepted that their decisions went wrong, and the company is indeed in dire straits.
The statement 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 happened to us. We started doing too many things, and all of us starting with myself and Rohit, are to blame for it..”
We had reported on February 13th that Snapdeal may fire up to 1000 employees due to increasing losses, and to minimise their biggest expense: employee salaries.
This firing has been now been confirmed, as the statement said, “We will be removing layers, sadly we will be saying painful goodbyes to fellow colleagues. This is by far the hardest decision that we have taken.”
Snapdeal would be now focussing mainly on their core areas and shutting down categories such as FMCG and beauty products which brought in less sales.
As per estimates, Snapdeal was incurring losses to the tune of Rs 160 crore per month, and they have very less cash reserve left to sustain operations. They are right now gasping for funds, and terminating 800-1000 employees may be the precursor for getting more investments.
And the reason for such increased losses and subsequent terminations can be gauged from this single line in their statement: “GMV is vanity, profit is sanity”
Both founders have decided to take 100% cut in their salaries as well.
One of the employees said, “By the time we finished reading the mail, HR (human resource) called us to their office. They said we would get three months of severance pay. We said yes, as that was the only option on the table,”
Yepme May Fire 90% Of Their Employees; Flipkart Reduces Office Space
As per unconfirmed reports, Yepme may fire close to 80-90% of their employees, mainly due to severe cash crunch and increasing losses.
The process has already started it seems, as several employees in non-core areas like admin, HR etc found their emails not working since February 1st. Many of them voluntarily left the company, while several of them are waiting for Yepme management to terminate them, so that they can get their severance pay.
There are around 190 employees of Yepme working in various departments.
Meanwhile, India’s largest e-commerce player Flipkart has decided to reduce their office space by 50% in Bengaluru campus, to cut costs. While they decided to occupy and buy an office space of 2 million square feet, in 2015, they have now decided to reduce it to 900,000 square feet.
Confirming this news, Mike Holland, CEO of Embassy Office Parks said, “We are in discussions with Flipkart on the overall space reduction which if agreed can be a win win scenario given the current market scenario and the very low space availability in the market,”
Employee terminations, reduction in office space and more. Can Indian e-commerce survive this downtime? What exactly is wrong with the industry? Will the era of discounts to lure customers will end?
Lots of questions, but very few answers.