India’s Snapdeal to lay off up to 3,000 staffers: Report
This is part of the Delhi-based company’s plans to cut costs due to lacklustre growth and bleak funding environment
Snapdeal, one of the top three major players in the e-commerce space in India, is planning to lay off between 1,000 to 3,000 employees (about 30 per cent of its total workforce) in two months, says an The Economic Times report quoting sources.
This is part of the Delhi-based company’s plans to cut costs due to lacklustre growth and bleak funding environment, added the report.
The decision will hit 1,000 direct staffers and nearly 2,000 contact workers employed by the firm’s logistics subsidiary Vulcan Express. In an email communication last week, Snapdeal asked managers within the marketplace operations to “right-size” their respective teams, the ET report added.
A year ago, Snapdeal had fired around 200 people across various departments.
It has been a tough time for the e-commerce industry in India. All major players, including Flipkart and Snapdeal, have been struggling for the past two years, due to immense competition from US-born Amazon. As a result, their marketshare shrank and revenues came down, forcing them to scale down operations. A few months ago, Flipkart’s valuation was marked down by its minority investor Morgan Stanley several times.
At the same time, Paytm, another major player in the online retailing space, steadily grew its customer base and business, thanks mainly to the demonetisation announced by Indian Prime Minister Narendra Modi in November last year (Paytm acquired millions of customers since this announcement). As per a report, Chinese e-commerce giant Alibaba Group is investing between US$200 million and US$250 million in Paytm. Alibaba is officially entering India to set up an B2C e-commerce venture in partnership with Paytm. This will further intensify competition in the market, hitting Snapdeal badly.
Also Read: Flipkart in talks with Wal-Mart to raise up to US$1B to check Amazon’s dream run in India
Last August, VCCircle reported that Snapdeal was in preliminary talks for a possible merger with Flipkart and Amazon India.
A few weeks ago, Flipkart Co-founder Sachin Bansal urged the government to frame protectionist policies to protect domestic players from competition from foreign players like Amazon.
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