Indian ecommerce firm Snapdeal is laying off nearly 600 employees, as it cuts back on spending, according to several media reports citing sources.
A Snapdeal spokesperson told the Press Trust of India: On our journey towards becoming India’s first profitable e-commerce company in two years, it is important that we continue to drive efficiency across all parts of our business, which enables us to pass on the value to our consumers and sellers.
Note that the company hasn’t denied the lay-offs. With efforts to raise fresh funding taking longer than expected, the company’s immediate priority would be to extend its runway.
According to a report in financial daily Mint, Snapdeal and its payments subsidiary Freecharge, have a total of Rs 1400- 1600 crore (~$208 – $ 238 million) cash left in the bank. At a reported burn rate of $25 million month, that would last the company 8-10 months.
“We have realigned our resources and teams to further these goals and drive high-quality business growth,” the spokesperson added. Several others have also left the company. Earlier today, the company confirmed the departure of Freecharge CEO Govind Rajan.
The Delhi based online retailer’s efforts to raise fresh funding, seems to have hit hurdles as late stage investors pull back on investing in the sector. In an internal e-mail seen by The Economic Times, company founders Kunal Bahl and Rohit Bansal pledged not to take a salary.
The battle for marketshare is now mainly between homegrown Flipkart and US based Amazon. Chinese ecommerce giant Alibaba is also gearing up to enter India.
Its rival Flipkart has also been in the market to raise money, but it appears that the Bengaluru headquartered company has had more luck. Earlier today, Mint reported that Flipkart is in talks to raise up to $1.5 billion from investors including Microsoft, eBay, PayPal and others at a valuation of $10-12 billion. To be sure, Flipkart is also cutting down on costs. Earlier today, Hindustan Times reported that Flipkart is looking to bring down its real estate costs.
We’d reported earlier in December that Chinese ecommerce giant Alibaba was in talks to buy out Snapdeal. However, we’ve learned that the two companies didn’t make much progress, as Alibaba’s offer was much lower than what Snapdeal was expecting.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.
Update: (22/02/2016, 3.42 PM IST): Added fresh details about Snapdeal founders not taking a salary and also the exit of Govind Rajan.