In an unusually candid admission to its staff, Indian e-commerce major Snapdeal's management has said it has made mistakes like many of its industry peers, failed in some aspects of its business, which have led to some "tough" decisions as part of its goal to become a more profitable business in the next two years.
Snapdeal's co-founders Kunal Bahl and Rohit Bansal, in an e-mail to staff, said they would take a "100 per cent cut" in their salary along with many other senior executives who have chosen to take significant cuts in pay. The company has also reportedly sacked 600 staff as part of a cost-cutting push. Here are some extraordinarily frank confessions the two have made about where the company has gone wrong.
Over the last two to three years, with funding coming into the market, Snapdeal like many in the industry started making mistakes, the founders said.
"Has our company and industry been going through a troubled time? Absolutely. Did we make errors in our execution? No doubt about that."
Growth before business model
"We started growing our business much before the right economic model and market fit was figured out."
"We also started diversifying and starting new projects while we still hadn't perfected the first or made it profitable. We started building our team and capabilities for a much larger size of business than what was required with the present scale."
Did too many things; we take the blame
"...A large amount of capital with ambition can be a potent mix that drives a company to defocus from its core. We feel that happened to us. We started doing too many things, and all of us starting with myself and Rohit, are to blame for it."
Many successes, but few failures
The founders admitted that while the company has been trying harder and harder to achieve its many successes, it also failed in a few aspects.
"We probably hold the record for the company that got written off the most number of times by Internet pundits."
'GMV is vanity, profit is sanity.'
As part of its focus on profits, the company wants to shift focus only on core activities, "drastically" reduce costs, to turn profitable, which can, in turn, spur more growth and new projects.
"For now, we need to keep our heads down, focus all our energy on execution that delivers on our two focus areas - best customer and seller experience, and profitable growth. This will mean tough choices and a conscious departure from a me-too race to the edge of the cliff. Let's remember – GMV is vanity, Profit is sanity."
Indian e-commerce companies, for a long time, had focused solely on gross merchandise value (GMV), which is the total value of all the mechandize sold on its platform, as a measure of financial success.
Snapdeal is retrenching 600 staff as part of it cost-cutting plan in its latest round of cuts, according to media reports. In the short-term, the company plans to reorganise to build a "lean, focused and entrepreneurial" organisation, said the founders. The company's staff strength has drastically come down from an estimated 10,000 at the start of 2016 to 1,300 after the most recent cuts, Business Standard reported.
"Daunting as it may appear in the moment, it is important that we do this now...This also means more responsibility for the team members continuing on this journey with us."
"We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth. Sadly, we will also be saying really painful goodbyes to some of our colleagues in this process."
"Our colleagues are our friends before they are co-workers, and I feel a deep sense of disappointment that we won't be able to have them continue on this journey with us."
Snapdeal has been in fierce competition with rivals Flipkart and Amazon amid a promising but competitive e-commerce sector in India, and a tough fundraising environment. Both Flipkart and Snapdeal have also been trying to raise capital at a time when investors have been demanding to more see profits. Snapdeal has also reportedly put up for sale its payments subsidiary FreeCharge, which it bought in 2015 for $400 million.Suggest a correction