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Snapdeal To Lead Beginning of Ecommerce Bubble Burst?

Snapdeal To Lead Beginning of Ecommerce Bubble Burst?

We already know that all the e-commerce retailers are experiencing huge losses. Different e- commerce companies fighting with one another to occupy the first position, today we present you the case of Snapdeal. This online retailer started laying off employees, a process which began from Wednesday, i.e. on February 22nd. As this news spread, Snapdeal’s cofounders Kunal Bahl and Rohit Bansal started sending out e-mails to their staffs. In the sent mails, they both admitted that they were involved in some of the very wrong decisions, taken by the company in the past few years.

  • A Cost Cutting Drive In Order To Conserve Cash:

The co-founders of Snapdeal had written one more mail, on the February 13th. This e-mail was a kind of warning sign for the employees to be prepared for the tough decisions that might be taken.  As mentioned earlier, Kunal Bahl and Rohit Bansal sent an email to their anxious staffs. In the e-mail itself, they mentioned that the co-founders will take a 100% salary cut. Let me also remind you that this e-commerce company is backed by Foxconn of Taiwan and also by Japan’s SoftBank.

Snapdeal has several headquarters, of which one of them is in Gurgaon. In the first phase of the layoffs, Snapdeal has fired approximately 300 employees. Well, the majority of the laid off employees belong to the Gurgaon headquarter. We also speculate that the number of laid off employees can even go up to 1000. Many people also said that the layoffs can even go beyond 1000.

  • Financial Aspects Of Snapdeal:

Many people said that this e-commerce company is looking towards merging of several of its major categories. It is very clear from the records that Snapdeal kept on getting in even worse situations, financially. The previous records suggest that Snapdeal’s salaries and bonuses accounted for around Rs. 217 crore. While, the same record for the year 2015-16 suggests an amount equal to Rs. 673 crore, which is an increase of around 2.5 times the last year’s record. All of this clearly indicates the financial trauma that Snapdeal is suffering from.

  • Possible Reason For Such Undesired Results:

Over the past few months, Snapdeal has suffered a lot. One of the several reasons for this can be the inability to rack up fresh funds. This reason especially become of more importance as the biggest e-commerce retailer is the Amazon and Flipkart. Amazon, on the other side is the richest in terms of cash, while Flipkart, on the other side has become highly competitive these days.

  • What Should Be The Next Desired Step?

The first and foremost step that they need to take now is that they need to follow the right economic model. Also, instead of focusing on too many things, it must concentrate only on the main strengths. Well, I guess Snapdeal founders definitely understood this fact. This can be well derived from the fact that they have shut down Shopo, their consumer to consumer marketplace. They have also discontinued SD Instant as well as its express delivery service.

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