India’s Snapdeal Struggles, Lays Off Employees

The battle to become the ruler of the eCommerce world is a tough one to win. With giants like Amazon, Alibaba and others, it’s hard to break into the online sales arena and maintain a strong lead.

India eCommerce company, Snapdeal, is feeling the heat of online sales competition with its most recent announcement. The online marketplace shared that it is “restructuring” by laying off employees. The number of layoffs is said to be between 500 and 600 people.

A Snapdeal spokesperson shared its reason for this move with Tech Crunch: “On our journey toward becoming India’s first profitable eCommerce company in two years, it is important that we continue to drive efficiency across all parts of our business, which enables us to pass on the value to our consumers and sellers. We have realigned our resources and teams to further these goals and drive high-quality business growth.”

The reason for Snapdeal’s move is to make cuts to its online payments division FreeCharge and its logistics operation Vulcan Express. Rumors are also floating around that Snapdeal could potentially sell FreeCharge and that Naspers may buy it for $300 million.

The main problem for Snapdeal is that its competitors in the eCommerce space are significantly outpacing the company when it comes to investments. While Flipkart has recently raised $1.5 billion and Amazon has invested $3 billion in expanding into the India market, Snapdeal has raised only $1.6 billion overall to date.

With the rise of smartphones and improved standard of living in India, internet penetration is also on the rise. As such, India has become the hotspot for eCommerce companies to invest and expand. To keep pace with eCommerce giants like Amazon, Alibaba and Flipkart, Snapdeal may need a more aggressive growth strategy.