Home / Tech News / India’s Snapdeal to lay off 500-600 as it battles Flipkart and Amazon

India’s Snapdeal to lay off 500-600 as it battles Flipkart and Amazon

Snapdeal, one of India’s big online marketplaces, is feeling the pinch of competition from Flipkart, Amazon and a host of startups that have emerged with the rise of e-commerce in the country. The startup — backed by the likes of eBay, Alibaba and Softbank and last valued at $6.5 billion — said it is laying off staff as part of a bigger restructuring. The company has not publicly confirmed the number of people or other details of what will be cut, but TechCrunch understands from sources close to the company that layoffs will be between 500 and 600.

Reports from earlier today, before Snapdeal confirmed the layoffs, had said the cuts would number as high as 800.

The cuts will come across all of Snapdeal’s operations — which include the Snapdeal marketplace, online payments division FreeCharge and logistics operation Vulcan Express — and are part of a bigger restructuring that could also include selling all or a part of FreeCharge. Indian publication Business Standard says that Naspers is in the running to buy FreeCharge for $300 million — not a great price, considering that Snapdeal acquired FreeCharge for $400 million in 2015.

The turn of events today is the latest stumble for Snapdeal, which has been spending aggressively to compete for customers in India, as well as trying to diversify into different lines of business like logistics and payments to offset the low-margin but high profile business of selling goods. In addition to bigger local competitor Flipkart — which is courting investment from the likes of Walmart — Amazon has redoubled its efforts to grow its business in India, after committing $3 billion of investment into the country in 2016 and subsequently launching a host of services like its sticky Prime loyalty program.

While Flipkart is reportedly now pushing a $16 billion valuation, not all boats are being lifted by that tide. Snapdeal is reportedly looking at a down round for its next fundraise, and in any case it has not closed. Factor Daily, citing reporting from local publication Mint, notes that the company has only about 8-10 months of runway left out of its cash coffers of $208 million – $238 million. Asked by TechCrunch, Snapdeal would not comment on the state of its latest funding, or its runway. “We are adequately funded,” a spokesperson told TechCrunch. 

The company is not disclosing revenues, user numbers, or how much staff is now working at the company. It said that previous cuts it made have led to EBITDA increasing by 40% in the first nine months of this financial year. “The efficiency gains arise from many business process & operations optimization initiatives, which has led to 35% lower delivery costs, 75% lower data hosting costs on account of Snapdeal’s deployment of its private cloud solution, and 25% lower company fixed costs,” it said.

Snapdeal has to date raised nearly $1.6 billion.

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