Homegrown unicorn Snapdeal, in the wake of cutting costs and conserving cash, has decided to shut down its app-only, zero-commission, affiliate marketplace Shopo. The platform will stop operations from February 10, 2017.
As stated in a blog post by Shopo,
“We started, a year-and-a-half ago, from a small conference room with our mission to enable small and individual sellers across India to sell online. In this short time, we have together discovered the dynamism and vibrance in the C2C space in India. We thank you for your support and feedback that enabled our young team to help more than 2 Lakh sellers start and grow their online shops. The ecommerce market in India will continue its robust growth. However, we realise that it will take some more years for a broader ecosystem to develop around the C2C segment.”
As shared by a Shopo seller with Bloomberg, the company had sent mails to all sellers revealing the shutdown Post this announcement, many sellers have started migrating to other platforms.
Saahil Goel, CEO and founder of Big Foot Retail Pvt. Ltd which runs C2C ecommerce platform Kraftly, shared with Inc42, “We’ve experienced 2x growth in seller sign-ups on the platform in the last week or so. We usually add around a 1000-1500 sellers/ week. In the past few weeks, we are now adding 2000-3000 sellers/ week. We are at a total of 50,000 sellers as of now and target to be at 200,000 by the end of the year.”
He further stated that seller enablement in any commerce play isn’t complete without offering the full stack – i.e. listing, discovery, payments, and logistics. With any of these pieces missing, no seller enablement business can work. “From an impact to industry perspective, I guess it’s further validation that whether it is ecommerce for commoditised products (as done by Amazon/Flipkart) or SMB or C2C commerce, the full stack approach is necessary,” he added.
Snapdeal’s Trouble Bubble
Snapdeal acquired Shopo in 2013. A marketplace for Indian designer and handicraft products, it was founded by Theyagarajan S and was backed by Sequoia Capital and angel investor Sashi Reddi. After the acquisition, in July 2015, Snapdeal relaunched it as a zero commission marketplace which allowed small sellers to chat, buy, and sell on the platform.
In September 2015, the company also announced to invest $100 Mn in Shopo over a period of two years. While sharing plans, the Snapdeal team was confident of reaching 1 Mn sellers on Shopo. Also, earlier this year, Shopo claimed to surpass Snapdeal in terms of number of sellers associated with the platform. As reported, till February 8, 2017, Shopo has on its portal around 50,000 sellers with more than 3 Mn listings.
The media first got wind of trouble in paradise when, in August 2016, Tejasvi Mohanram, founder of the online consumer and SME credit platform RupeePower, which was acquired by Snapdeal in March 2015, bought back a major share of his company.
Later, Snapdeal also shut down marketplace for premium branded fashion and lifestyle products, Exclusively. Acquired almost a year-and-a-half back, Snapdeal integrated the entire catalogue into its marketplace.
Since then Snapdeal has continued closing and merging many of its services. In October 2016, it moved its office to coworking spaces instead of operating from leased offices, in an effort to trim costs. Iin November 2016, it merged Shopo’s team with the newly-acquired entity FreeCharge; and just earlier this week, the company also stopped the incentive programme for customers that it previously launched through affiliates. As per reports, the company informed its affiliate partners that it will not be able to pay for orders and additional installations of its mobile application routed through them, effective immediately.
Snapdeal again got a blow from its two senior executives during this time of crisis. Sandeep Komaravelly, the Senior Vice President for Shopo, resigned in January 2017, while Abhishek Kumar Head of Corporate Development and also responsible for fundraising activities in the company, left just yesterday.
Is Snapdeal Losing The Ecommerce Battle?
Since its launch in 2010, Snapdeal has reportedly led the Indian online shoppers into the world of 65 Mn plus products across 1,000+ categories from over 125,000 regional, national, and international brands and retailers. All while maintaining a huge seller base of over 30,000 and delivery capability to more than 6,000 pin codes across the country.
Apart from Shopo, Exclusively and RupeePower, the ecommerce firm has acquired about 8 more startups such as GoJavas, Doozton, esportbuy, Wishpicker, Smartprix, Unicommerce and Reduce Data. Also, in April 2015, it acquired Freecharge for an undisclosed amount.
Some of the other acquired companies by Snapdeal are also not doing any better. For instance, GoJavas temporarily suspended operations in August 2016, and esportsbuy got shut down in 2012, just two months after its acquisition.
Amidst increasing competition with deep-pocket players like Amazon and Flipkart, Snapdeal has been lately finding it difficult to fight on. Although the company is trying to raise funds, its valuation is dropping constantly. Just today, Softbank, one of the major stakeholders in the company, marked down its value in both Ola and Snapdeal by $475 Mn.
For the year ended March 2016, Snapdeal recorded losses of $495 Mn (INR 3,316 Cr) while revenues were for $217.6 Mn (INR 1,457 Cr), almost 50% less.
To date, over $1.76 Bn has been raised, so far, in 12 rounds. The founders – Kunal Bahl and Rohit Bansal’s – attempts to raise more funding, even at lower valuations, does not seem to have borne any fruit. And with only 6.5% share holding with the copmany’s founders and rumours of an acquisition by Alibaba, maybe it is time, we asked this important question of the unicorn – and press for answers.