Indian e-commerce player Snapdeal which has been struggling to raise capital and locked in an intense battle with rivals Amazon and Flipkart, will lay off 500-600 people.
The layoffs will be done across Snapdeal, Vulcan (logistics) and Freecharge (digital payments business). The reduction will include employees across levels and the process will be completed in the next few days, sources said.
In an internal email accessed by The Economic Times, founders, Kunal Bahl and Rohit Bansal pledged not to take a salary for an unspecified period. "We believe that every resource of the company should be deployed for driving us towards profitable growth and with this announcement, both Rohit and I are taking a 100% salary cut.""Many of our leaders have also stepped up proactively and offered to take a significant cut in their compensation, which is an excellent sign of how galvanised the team feels in this shared quest for profitability," the email stated.
A Snapdeal spokesperson said: "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.""We have realigned our resources and teams to further these goals and drive high-quality business growth," the spokesperson added.
The company had last reported an employee strength of 8,000 people.
Snapdeal has already taken a number of steps to increase optimisation of operations that resulted in 35 per cent lower delivery costs and 25 per cent lower company fixed costs.
Snapdeal has also seen its net revenues increase 3.5x this fiscal. "Building on all of these substantial gains, Snapdeal expects to be the first profitable e-commerce company in India within two years," the spokesperson said. It also expects Vulcan Express to turn profitable by the middle of this year.
In February 2017, Kunal Bahl, co-founder of Snapdeal told Reuters he expects to turn profitable in the next two years, as the company cuts costs and boosts efficiency in a market currently dominated by homegrown Flipkart and US internet giant Amazon.
Snapdeal was valued at $6.5 billion after a fund-raising last year. But valuations of Indian e-commerce firms are generally believed to have softened since then. Fidelity Investments has marked down the value of its holding in Flipkart by around 36 percent.
Snapdeal reported a loss of Rs 29.6 billion ($441 million) in the financial year to March 31, 2016, according to regulatory filings, but Bahl said they were steadily improving.
Snapdeal's EBIDTA, or earnings before interest, tax, depreciation and amortization, for the nine months of the current financial year has improved by about 40 percent from a year earlier, while commissions have grown 3.5 times, he said.
(With PTI and Reuters inputs)
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