ShopClues lays off 200 employees as it runs out of M&A options
Ecommerce marketplace ShopClues has laid off about 50% of its workforce as the going gets tough for the Gurugram-based company following its prolonged scouting for potential suitors seems to have failed, media reports said.
Clues Network Pvt. Ltd, which owns and operates ShopClues, has fired as many as 200 people.
Responding to a detailed email query from TechCircle, a ShopClues spokesperson said the company has been steadily reducing its workforce, mostly in operating functions as it leverages gains from technology.
“This process has been going on for the last two years. Our customer NPS has been increasing steadily in these two years while our workforce has dropped by 50% in the same time period. Our focus has been profitability and this year we plan to achieve that,” the spokesperson said.
NPS is the net promoter score, a metric used in ecommerce to measure the likelihood of customers recommending the platform to their circle.
The Times of India reported today that the company’s co-founder Sanjay Sethi had advised employees in April to look for jobs. Those who failed to find jobs outside have been asked to leave now. It also said another round of layoffs is expected in the coming weeks.
TechCircle had previously reported that the cash-strapped ShopClues approached now-rejuvenated Snapdeal with a merger offer. Nexus Venture Partners, a common investor, was believed to be orchestrating a potential deal. The investor-brokered deal was eyeing to merge ShopClues with Snapdeal in an all-stock transaction.
The Economic Times later reported that the deal did not go through as the due diligence by Snapdeal found significant pending liabilities on the ShopClues’ balance sheet.
ShopClues was founded by former Wall Street analyst Sandeep Aggarwal and ex-eBay executive Sanjay Sethi. It entered the exclusive club of 'unicorns', or startups valued at $1 billion or more, after raising an undisclosed amount in a Series E funding round led by Singaporean sovereign wealth fund GIC in 2016.
Soon, Aggarwal stepped down as CEO after an insider trading controversy and was replaced by Sethi. Aggarwal’s wife, Radhika Ghai Aggarwal, was given the designation of co-founder.
In March 2017, Aggarwal filed a first information report against his estranged wife and Sethi, accusing them of criminal conspiracy, cheating and forgery. He also accused them of thwarting his re-entry into the company.
Amid this acrimony, ShopClues’ fortunes took a turn for the worse as both Flipkart and Amazon accelerated their expansion and Snapdeal regained its footing.
The restructured Snapdeal’s volumes began improving at ShopClues’ expense. ShopClues’ order volumes continued to drop month-on-month even as its fundraising efforts have yielded no results.
Snapdeal and ShopClues focus on unstructured and unbranded categories, both are attempting to create a strong user base in the less-explored markets of tier-II cities and beyond, and both follow a distributed sourcing model.