In a fresh round of cost cutting, online retailer Snapdeal is laying off 600 staff across its e-commerce, logistics and payments operations, PTI reported citing sources.
The layoffs will happen across Snapdeal, the company's logistics arm Vulcan Express, and its digital payments business Freecharge over the next few days. Freecharge CEO Govind Rajan has also reportedly quit nine months after joining the company.
After several months of struggling to raise capital, Snapdeal appears aggressively focused on becoming profitable. Snapdeal CEO Kunal Bahl recently told Reuters the company hopes to achieve profitability in the next two years.
In an e-mailed statement, a Snapdeal spokesperson said the company aims to become "India's first profitable e-commerce company in the next two years," adding it was important to continue to "drive efficiency" across all parts of its business. Snapdeal hopes its logistics arm, Vulcan Express, will turn profitable by the middle of this year.
"We have realigned our resources and teams to further these goals and drive high-quality business growth," the statement said.
Snapdeal has also been focusing on other cost-cutting measures. It has lowered its delivery costs by 35 per cent and its fixed costs by 25 per cent, for example. Analysts say a fresh round of fundraising is crucial for the Snapdeal, which was valued at about $6.5 billion at its last fund-raising round last year, but had a strained balance-sheet, with investors putting more emphasis on profitability.
It posted a loss of Rs 29.6 billion in the financial year ending March 31, 2016, according to the company's regulatory filings. However, its revenue has been improving and its net revenues jumped by over three times in the current fiscal, the Snapdeal spokesperson said. Its earnings before interests, taxes, depreciation and amortisation or EBITDA, which is an indicator of cash flow, increased by 40 per cent in the first nine months of this financial year.
Snapdeal has been in fierce competition with rivals Flipkart and Amazon amid a promising but competitive e-commerce sector in India. According to Bank of America Merrill Lynch note last September, the value of goods sold via online channels in India is expected to increase by over ten times to $188 billion by 2025.Suggest a correction