As the Flipkart-Snapdeal merger faces a tug-off war between the investors, Snapdeal has begun clearing off its dues in the meantime. Reportedly, Snapdeal has started initiating payouts to the employees it laid off two months back.
In February 2016, Snapdeal fired a massive number of employees amidst cost-cutting woes. While Inc42 sources confirmed the number to be around 600, a recent TOI report believes it to be between 1,000-1,500.
Commenting on the layoffs, Snapdeal earlier told Inc42 that it will be ‘rationalising part of its workforce’ on its way to becoming a profitable entity in the next two years. The layoffs were done across the company’s three units – Snapdeal, Vulcan Express, and FreeCharge. Furthermore, the retrenched employees were promised three-months severance pay, as per earlier Inc42 reports.
An email sent to Snapdeal did not elicit any response at the time of publication.
The Snapdeal camp is on the brink while investor SoftBank Capital enforces a sellout. The company has been struggling to control mounting losses, which led to such restrictive measures as layoffs, moving offices and much more.
In April 2017, it also vacated its 90-seat office at a coworking hub in Andheri in Mumbai and was in the process of vacating its offices in Gurugram as well. The founders Kunal Bahl and Rohit Bansal are already working on a zero salary from quite a few months.
Not only this, the company has also been facing several legal tangles. The recent events included third-party vendors raising concerns to the Ministry of Commerce, Nirmala Sitharaman regarding long-standing payment of dues, and receiving summon by a Delhi Sessions court entrepreneur Gaurav Dua alleged them to copy his business model.
Earlier in April this year, Dream Merchants Pvt. Ltd, a Bengaluru-based firm filed a legal complaint against Kunal Bahl and other senior executives over non-payment of dues of up to $38.4K (INR 25 Lakhs).
In April 2017, Sameer Parwani CEO and co-founder of CouponDunia, a third-party vendor with Snapdeal, took to Twitter to express his ire against the beleaguered company’s payment practices, accusing it of being ‘months behind’ on the same. Snapdeal’s official stance was,“The matter is being looked into and payment is being processed. The payment will be made by next week.”
In recent weeks, Snapdeal’s skeletons are emerging out in the open with yet another case being filed against co-founder Kunal Bahl in Delhi by Bengaluru-based apparel-seller Rajdhani Cotton. However, with the only other example being that of consumer Internet company AskMe’s controversies regarding employee and vendor payouts after shutting down in August 2016, it is heartening to see the company trying to clear its financial morass in a step-by-step process.
Lately, the Indian ecommerce scene has been going through a phase of consolidation, where Flipkart has emerged as the ‘anchor.’ With players like Myntra, Jabong, PhonePe already under its umbrella, it is very likely that Flipkart is now the frontrunner for grabbing Snapdeal. How Alibaba-backed Paytm and global giant Amazon will tackle this new development remains to be seen as the stakes for Indian ecommerce become higher than ever.