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

The Economic Times - - Disruption: Startups & Tech -

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.

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