So far Snapdeal has shut down two of its acquired startups, Exclusively.com and Shopo. The plan to invest 100 million dollars in the handicrafts market has been stalled as well. Sources close to HR consultants say that not only will ancillary operations like Shopo be shut down, but that there would be layoffs of employees related to such operations.
Snapdeal aims for profitability in 2 yearsAnd about Kunal Bahl’s statements from 6th February. Did Bahl want to deflect attention from a then impending devaluation from SoftBank or does Bahl really see a clear path to profitability?
On 6th of February, Bahl, the CEO and cofounder was quoted on multiple media outlets saying Snapdeal will turn profitable in the next two years.
Since then Snapdeal has been in the news for introducing methods to raise profits - 120 more fashion brands, signing a 5 crore deal with Amplus Energy Solutions to install 1 MW solar rooftop warehouses for Vulcan Express (their logistics unit) and for increasing commissions on sales.
Will all of this be enough to turn things around? Public opinion is, not.
According to filings their losses have increased by 150 percent, their revenue has increased by 56 percent.
As founder of Qik Stay tweets, one path to profitability seem to be paved along a leaner, smaller employee outfit.
By 9th February, SoftBank announced that it was devaluing their stakes in Ola and Snapdeal by 475 million dollars.
Ripple effects of demonetization - nobody is hiringIt’s not a direct consequence, but newer ecommerce players like Snapdeal may have been more adversely affected by demonetization than the founders let on.
Sources say that all companies - A to Z, across new age industries like ecommerce or to the older ones like FMCG and consumer durables, construction, retail, and logistics have either deferred expansion plans or have all put it on hold for the time being. This is an indirect consequence of demonetizaton.
The unorganized sector and the blue collared workers constitute a large proportion of the economy. They were mostly earn their living in cash. When demonetization struck, companies were grappling with a cashless situation and the average consumer too put their purchases on hold.
More stable ecommerce companies like eBay and Amazon were better armed to deal with the situation, but newer ecommerce companies were hit hard. When close to 80 percent of your sales are through cash on delivery, no doubt demonetization would have hurt these companies much more than they let on.
Whether Kunal and Snapdeal will ever become profitable by virtue of sales out pacing expenditure, only time will tell. Between now and that profit expected in 2 years anything can happen. The world waits with baited breath.
BW Reporters
Regina is a reporter for BW Businessworld. In her previous assignments, she has worked with Independent television Network as a news anchor and reporter in Sri Lanka
