Staff Get the Unkindest Cut in this Snapdeal 2.0 Reboot
After the tug of war and the final rejection of Flipkart’s offer, Snapdeal founders will have to clock .₹ 150 crore over the next 12 months. Here is the story behind the story
Payal Ganguly & Biswarup Gooptu
Bengaluru | New Delhi: After snubbing the offer made by Flipkart and mediated by primary investor SoftBank, Snapdeal’s parent Jasper Infotech has been hard at work chalking out a survival plan that likely entails letting go of a significant portion of its workforce.
As per its remodelled severance package, several employees are being asked to leave without notice on one month’s salary and one month’s severance package, as opposed to three month’s severance pay promised in February, according to Snapdeal employees ET spoke with.
The company let go of nearly 600 employees earlier this year and currently has about 1,300 employees.
The Snapdeal 2.0 strategy put forth by cofounders Kunal Bahl and Rohit Bansal has been bolstered following a meeting between Bansal and the management of Japanese ecommerce and internet company Rakuten for a investment as recent as a few weeks ago, said a person aware of the discussions. Rakuten did not comment on the talks. Snap- deal declined to reply to email queries sent by ET.
A leaner Snapdeal will focus on its top product categories with a fraction of its earlier team strength. Three Snapdeal employees ET spoke with on the layoffs said they each had been promised retention bonuses and asked to stay back when they had earlier planned to leave for other jobs. But on Monday morning, these three employees received emails asking them to leave.
“We were not given any notice,” one of them said. Another employee said business heads have been asked to draw up lists of people to be fired by the company. ET could not verify this independently. A person aware of the Snapdeal management’s plans, however, said the company might see attrition among mid- and junior-level employees. “Many of them were waiting around for the retention bonus which would have come with an acquisition by Flipkart. Now there is no reason for them to be around. Over two to three months, we expect the (employee) numbers to come down to half. Also, in cases where there maybe a few layoffs, there is no reason why they wouldn’t be paid three months’ severance pay,” he said.
Apart from the anticipated layoffs, the platform will also begin consolidating categories that would result in a smaller business.
“Typically, categories such as kids products and fashion, automotive parts and home fitments and others do well on the platform. We saw a slump from November to February, whereon the orders have not grown beyond,” said a seller on the Snapdeal platform.
Another seller said the company would soon consolidate mobile phone and electronics as a single category, as the number of exclusive devices launched on the platform had dropped.
The founding team of Snapdeal, who have been in a tug of war over valuation with Flipkart and SoftBank, will be required to prove the goal of achieving gross profitability of ₹ 150 crore over the next 12 months, as stated by Bahl in a letter to employees on Monday.