As online marketplace Snapdeal started laying off employees last week, the company co-founders Kunal Bahl and Rohit Bansal sent out an email to employees admitting that they took multiple wrong decisions over the last two-three years amid the funding frenzy and that it was time to course correct.
According to sources, the troubled e-tailer could be laying off 60% of its workforce across the country. "We started growing business before right economic model and correct market fit," Bahl and Bansal wrote adding the abundant flow of capital over the last few years made them commit mistakes and took the focus away from their core business. "We started doing too many things and all of us including myself and Rohit are to be blamed for this," Bahl wrote. He said from here on, Snapdeal is going to focus only on its core strengths and shut all non-core businesses as it cuts costs drastically.
Snapdeal's struggles over the past six-eight months are closely aligned to it not being able to rack up fresh funds as it fights out cash-rich Amazon and home-grown rival Flipkart in a highly competitive Indian e-commerce market.
Bahl, wrote that Snapdeal will be re-organising itself into a lean and entrepreneurial outfit. 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, he said. The co-founders will take a 100% salary cut, Bahl informed through the email.
At the Gurgaon headquarters, Snapdeal employees were seen amid extremely tight security arrangements as the layoffs began. The staff is being asked to leave on an immediate basis. There are also reports of the e-commerce company moving to a smaller office in Gurgaon.
Flipkart slashes mega Bengaluru office lease deal
Meanwhile, Flipkart has substantially scaled down its need for a huge office space in Bengaluru, which it leased almost two years back, as e-commerce companies in the country struggle to find new avenues of growth and raise fresh funds amid sharp cuts in their valuations. India's biggest e-commerce company is now looking to lease just 0.83 million sqft office space.
The initial agreement was for 3 million sqft from southern property developer Embassy Group, which was subsequently downsized to 2 million before the company finally decided on the current lease deal.
The deal was originally struck when the funding boom was at its peak. At the time, it was the country's single largest office lease deal. Flipkart has not raised funds in the past 18 months, even as it defends its leadership position in a bruising marketplace war with Amazon.
The lease, which is for 20 years, would see Flipkart pay Rs 50 per sqft, which translates into an annual rent of about Rs 50 crore.