From bad to worse: Getting back on track is an uphill climb for Snapdeal

A year ago, ASF Tower A and B, the sprawling campus of Snapdeal in Gurugram, would be teeming with 20-somethings furiously typing away on their laptop screens, trying to increase the gross merchandise value, the ‘erstwhile’ go-to matrix of online marketplaces.
 
Cut to 2017, most of the offices in ASF Tower have a forlorn look. Missing are the fresh grads in designer wear, sprawled on beanbags and glued to laptop screens or the blaring music which they loved playing while at work. After getting rid of more than 80 per cent of the 10,000-strong workforce, Snapdeal bosses are contemplating moving out to a smaller office in Gurugram.
 
Things have turned from bad to worse for the Kunal Bahl- and Rohit Bansal-led company which is powered by Japanese telecom and investment giant Softbank.
 
Over the past year, the once arch-rival of Flipkart has lost the fight to global online marketplace Amazon which made rapid strides in 2016 and is at the top of the e-commerce heap at present. Efforts to raise additional funds have fallen flat, with Softbank, according to sources, refusing to invest anymore in the beleaguered company. Snapdeal had managed to raise around $1.7 billion. A large chunk of it came from Softbank, and in one of the rounds it had managed to rope in Alibaba as well.
 
In the face of a severe financial crunch, 8,500 employees were reportedly asked to quit over the past year. According to internal data, as well as interviews and statements, accessed and reviewed by Business Standard, Snapdeal has cut down its employee strength to 1,200.
 

In a candid mail to his employees a few days back, Bahl listed out the reasons of the company’s downfall and revealed that a ‘painful’ process to lay off staff was under way.
 
“Over the last two-three years, with all the capital coming into this market, our entire industry, including ourselves, started making mistakes. We started growing our business much before the right economic model and market fit was figured out. We also started diversifying and starting new projects while we still hadn’t perfected the first or made it profitable,” he said.
 
Bahl in the past was able to successfully pivot the company twice. From selling offline coupon books to going online with couponing to moving to being an online marketplace, Snapdeal has managed to survive close to a decade. However, this time around experts believe things are too haphazard to be set right.
 
Buying Freecharge for close to $400 million, investments in the now closed e-grocery portal, Peppertap, and spending over Rs 200 crore on a rebranding exercise were some of the major mistakes made by Snapdeal.  
 
“The company has spent a huge amount on things which were unnecessary. It bought a wallet without understanding the whole business, just to show Alibaba that they are a viable business for the Chinese major to consider when they enter India,” says a senior analyst from an international consultancy.
 
“The whole ‘Unbox’ campaign was another expense that should have been avoided. Money should have been spent more on technology than all this,” he adds.