After the recent layoffs, ecommerce unicorn ShopClues is looking to raise a new investment round. This potential fundraise was one of the driving factors for the layoff of 150-200 employees, a source close to the company told Inc42, speaking on the condition of anonymity.
“An acquisition with Snapdeal can also be on the lines, as the least layoffs were from the Shopclues’ marketing team and Snapdeal has a weak marketing team,” the anonymous source added.
Earlier in May, ShopClues was reported to be in talks for a possible buyout by Snapdeal, to escape the fallout of its operations. Prior to this in April too, ShopClues was said to be exploring a buyout by Snapdeal but the deal reportedly fell apart because of financial terms.
Further, the source also noted “the new investment could also be part of a merger with smaller ecommerce players, as mergers can lead to increase in revenue and that is now clearly a top focus for the company,” the source noted.
Last week, the company has said in a media statement, “Our focus has been profitability and this year we plan to achieve that.”
It is speculated that Shopclues has held talks with multiple ecommerce players including Flipkart, Paytm Mall, and Snapdeal for potential acquisition deal. In July 2018, ShopClues was also reported to be eyeing a merger with the global online retailer eBay, which later decided to invest in another ecommerce major Paytm Mall.
ShopClues was founded in July 2011 by Sandeep Aggarwal, while Radhika Aggarwal and Sanjay Sethi joined as cofounders. It is a managed marketplace that aims to provide a unique online shopping experience to its customers. Sandeep exited the company after a spat with the board in 2016 and Sanjay Sethi took over the role of CEO.
Over the past two years, ShopClues has steadily lost momentum, with the orders dropping to less than 30K per day. In a high cash burn business such as ecommerce, ShopClues was losing money every month.
“Post the new investment, the company’s focus might turn to its B2B or enterprise business as the company’s enterprise business is much stronger than B2C”, the source added.
In November 2018, ShopClues had reported a total income of $37.7 Mn (INR 273.3 Cr), an increase of 46% from $25.81 Mn (INR 187.1 Cr) in the previous year. It also narrowed its net loss by 40% to $28.17 Mn (INR 208.14 Cr) for FY 2017-18.