Shopclues, run by Gurugram-based Clues Network was once the fastest growing unicorn in the country and the leader in the online marketplace for unbranded and 'affordable' goods.Now, the company founded in 2011 by Sanjay Sethi, Sandeep Aggarwal and Radhika Ghai faces an existential crisis, which could see the first much-hyped unicorn shut shop even as rival Snapdeal is trying to turn around.
Sources Business Today spoke to said the company has let go of over 200 people in the last two months and now has skeletal staff. The fate of the remaining employees hangs in doldrums. The company in a statement to BT did not deny the sackings but refused to divulge numbers. It said the downsizing exercise was a part of ongoing restructuring to turn the firm profitable.
"In the last two years, ShopClues has continued its journey to enable MSMEs & service Tier 3/4 consumers from its platform. It launched multiple lines of businesses besides it core B2C marketplace which gained traction in the last two years. Our Enterprise Business is now 15 per cent of revenues and Ezonow, our social selling platform has crossed 8 lakh in resellers base" the statement said.
The company admitted in the last two years even as it reduced losses by 85 per cent via cost reduction and contribution expansion, it reduced its operational workforce 15 per cent to further lower operational costs.
According to data platform Crunchbase, Shopclues has raised 10 rounds of funding till date with a total investment of a little over $255 million backed by investors like Unilazer Ventures, Innoven Capital and Tiger Global. Trouble started in early 2017, when over 200 employees were let go even as the company called it natural attrition. Insiders say it was a cost rationalization move.
In a blog post earlier this year in April, Sanjay Sethi, co-founder of the company wrote "Last 3 years have been challenging to say the least, but these challenges also allowed us to rediscover ourselves. As a company, we had to figure out who we are and what we stand for. Figure out what value we add to our customers & employees. The good news is that we have come a long way and are stronger & wiser".
He said the idea was not to try and compete with Amazon or Flipkart by using their playbook but play by their strengths. "We ended Q4 FY2017 with Rs.38 crore in net revenue and a Rs.89 crore burn, while last quarter (Q4 FY2019) we did Rs.61 crore in net revenue with a Rs.8 crore burn. That is a 60 per cent increase in revenue while reducing our burn by 90 per cent in the same period" he added.
While the company battled the intensified competition, the ugly spat between the co-founders led to the exit of Sandeep Aggarwal. It also lost the effort to sell the company to Snapdeal at a throwaway valuation of around $280 to $320 million led it further into a downward spiral. It still claims to have 50 million registered customers with 22 million monthly unique visitors with more than 50 per cent of the traffic growing organically and 60 per cent of customers coming from Tier 3/4 cities.
With it being almost out of cash and no buyer in sight, Shopclues is said to be looking for investors on a war footing for survival.