7 years ago, when Snapdeal was launched, it was an offline deals and discount company. Now, in 2017, as the vision of Snapdeal 2.0 is launched, ditching a takeover bid by rival Flipkart, we are witnessing 4th major business model being implemented.
Snapdeal now wants to become the Taobao of India, in their 4th avatar but the path is not so easy.
It is the employees who are getting the raw deal here, as close to 80% of all existing employees will be terminated in coming days. There was a time when Snapdeal had 9000 employees. In a series of terminations and firings in the last few month, only 1200 employees are remaining. Now, due to the Snapdeal 2.0 effect, 1000 of them would be fired, leaving only 200.
This is certainly one of the major dips in the short history of Snapdeal, but as the saying goes, ‘Everything is fair in love and war’. And this is definitely one of the fiercest wars that Snapdeal has ever fought.
Snapdeal’s 4th Business Avatar: The Taobao of India
After launching as an offline deals and coupon website in 2010, Snapdeal converted into a pure play online marketplace in 2012.
Last year, they attempted to create an app based marketplace of services such as food ordering, flight bookings, bill payments and more, using the Freecharge platform as the pivot.
But unfortunately, nothing worked, and employee strength came down from 9000 to 1200.
A former VP in Snapdeal said, “Bahl (co-founder of Snapdeal) has tried a host of different business models. If we add them all up, there have been as many as nine pivots in the business, including the four major ones,”
The recent attempt is to create a consumer to the consumer marketplace, just like Taobao is in China. The business model is simple: Sellers and merchants can post their products for free, and there is no transaction fee on the sale of products. Revenues would be generated based on the advertisement by sellers, and for securing primary locations for listings.
Almost same as Olx or Quikr, who would be Snapdeal 2.0’s biggest competitors now.
Hardest Hit Are Employees of Snapdeal
However, due to the massive changes in business model over the years, it is the employees of Snapdeal who are hardest hit.
When talks of the possible merger with Flipkart was going on, employees were promised retention bonus, and 3-months of severance pay, in case they are asked to quit.
But now, the existing employees are given no notice and provided with only one month of salary as the severance package. And this is actually unfair to the employees.
One of the persons close to this whole saga said, “Many of them were waiting around for the retention bonus which would have come with an acquisition by Flipkart. Now there is no reason for them to be around. Over two to three months, we expect the (employee) numbers to come down to half..”
Talks are also onto converge their products and categories, and focus on what is selling.
For instance, categories such as kids products and fashion, automotive parts and home fitments have been doing well on Snapdeal, and they will be in focus. Besides, mobile and electronics would be converged as well.
Kunal said in his last letter: “Needless to say, we will need to keep a tight control on our costs and work towards becoming a hyper efficient culture delivering profitable growth, month on month,”
We will keep you updated as we receive more news related to Snapdeal and their existential crisis.