Snapdeal Starts Cost Cutting, Will Operate From Co-Working Spaces in Mumbai!
Early this year, it was heard that Snapdeal was firing 200 employees to cut down on costs, even though the company raised a $200 million funding, making them the second highest valued startup in India at that time. The after-effects of the firing can still be seen now, as the company mends its working spaces.
Snapdeal also redesigned its logo a couple of months back, and for this it has invested Rs. 200 crore in marketing and brand management. In fact, the company was known to have made a loss of Rs. 1,319 crore last year, further strengthening its sentiments to cut costs.
According to a report by ETtech, Snapdeal has vacated its 200-seat office in Mumbai and has sifted base to a 90-seat office in a co-working hub in Andheri. This transition is only one of the methods to curb costs and losses for the company. The expected reduction in costs is expected to be around 10%.
One of the people aware of the development, said “Apart from reduction in cost burden, flexibility to expand and cut space requirement as per business demand has led to the decision to move into a co-working space. Conventional office lease may not support that kind of flexibility.”
Tougher times for Snapdeal ahead?
Softbank-backed Snapdeal does not have a global imprint like Amazon, and does not have the first-in-business advantage as Flipkart does, however it does have its own customers that it has garnered over the years.
As the funds dry out, and the company focuses on brand image right now, a few functions might be taking the hit. The company even launched Snapdeal Gold, to take on Flipkart Assured and Amazon Prime, but it remained more of a simple service, than a competitor.
Snapdeal also consolidated its Gurgaon offices into one large one in Udyog Vihar, so as it minimize costs and maximize productivity. The company has been very careful about launching new categories, as it has diversified into a lot of industries with minimal returns.
As Flipkart and Amazon still rake in funding rounds, it becomes difficult for Snapdeal to keep up, and because the company has partitioned a lot of capital for rebranding, other functions might be hit by the effect.
It will be interesting to see Snapdeal financials early next year, as it has taken a lot of steps to improve its revenue and reduce the losses. We are sure revenues have increased, but unsure about whether the losses have kept stable or decreased.