Ecommerce unicorn ShopClues has laid off around 150-200 of its employees across departments on July 18, according to sources close to the company who spoke to Inc42 on the condition of anonymity.
A Twitter thread by an anonymous industry insider who goes by the pseudonym Corporate Kumar had earlier speculated that there are signs of the company shutting down due to a series of layoffs.
However, according to a ShopClues spokesperson, the company has been reducing its workforce for the past two years and using automation and technology to fill those gaps. The majority of the layoffs are said to be in the operations team. “Our customer NPS has been increasing steadily in these two years while our workforce has dropped by 50% in the same time period. Our focus has been profitability and this year we plan to achieve that,” the spokesperson told Inc42.
An unconfirmed media report has noted that Shopclues may not offer any severance package to the laid-off staff and will only give them pay till their termination date which was yesterday (July 18). The company did not respond to the speculation around the severance package for employees. “We ensure 100% out placements to them – our goal is to ensure within a week more than 80% of impacted employees get placed. We have a strong network of companies that we rely on each other to exchange talent and that’s what we are focusing on,” the spokesperson added.
In May, ShopClues was reported to be in acquisition talks with its rival Snapdeal. ShopClues was said to be looking for a buy-out offer from Snapdeal, in order to escape the collapse of its operations.
Over the past two years, the ecommerce company 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.
In July 2018, ShopClues was also reported to be eyeing a merger with the global online retailer eBay. It is speculated that Shopclues held talks with multiple ecommerce players including Flipkart, Paytm Mall, and Snapdeal for potential acquisition deal.
Founded in July 2011 by Sandeep Aggarwal, while Radhika Aggarwal and Sanjay Sethi joined later as cofounders. Sandeep exited the company after a spat with the board in 2016 and Sanjay Sethi took over the role of CEO. The company has raised over $1 Bn in funding from investors such as Tiger Global, Nexus Venture Partners, GIC, and more.
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. Though clearly that was not enough.
Similar to ShopClues’ claims of being focussed on profitability, Bengaluru-based online furniture retailer Urban Ladder had also laid off about 60 employees to cut losses, and in the hunt for a profit.
Amazon India had laid off nearly 60 employees from its recruitment team in early 2018. The company has cited the need to organise its teams and using resources optimally, as the reason for the lay off.