The Rise and Fall of Unicorn Firm, Shopclues
- BY Jaspreet Kaur
Feature Writer, BusinessEx
- Nov 08,2019
- 415 Mins Read
E-commerce has become a highly competitive niche over the years. The industry has gradually evolved and enlarged by building consumers’ confidence, ensuring good quality products and offering massive discounts.
E-commerce was an undiscovered space until 2013 when Indian e-commerce firm, Flipkart and US-based e-commerce firm, Amazon entered the Indian market. Both firms developed trust in consumers for online shopping and offered other additional services such as cash on delivery, easy returns, and cashback offers to entice customers.
Trailing the steps of Amazon and Flipkart, many small e-commerce players gradually emerged in the market and caused stiff competition. Shopclues, Snapdeal, and Overcart are some of the small e-tailers during that period.
According to business intelligence firm, Statista “In 2016, Amazon.in was the leading online store in India with net e-commerce sales of $ 437.7 billion, followed by local competitors Flipkart and Snapdeal. Mobile is also a profitable and promising shopping platform for the retail industry in India. About 23 percent of Indian internet users stated that they used a mobile phone for purchasing in 2016. This places India as one of the leading digital markets for mobile e-commerce penetration.”
Seeing the growth of the e-commerce industry, investors began betting on e-commerce players. Soon, this industry, which captured investors’ eyes turned into a hotbed and stirred small-scale businesses. The peak time of the e-commerce industry ended and a slow down began, diminishing investments in the sector.
Flipkart and Amazon were two companies that sailed boat in the stormy sea and survived as the former got Walmart’s funding and the latter stabilized through its widespread business across the globe. On the other hand, the likes of Shopclues dealt a blow and grapple to keep the business afloat.
What Happened to Shopclues?
Shopclues, which was established in 2011, administers an online marketplace that aims to enhance the user experience. It was launched in 2011 by Rashika Aggarwal, Sandeep Aggarwal, and Sanjay Sethi.
In December 2011, Shopclues got its first funding of more than $2 million, in turn, pushed the growth of its online marketplace.
In the initial years, the e-commerce company was having a steady growth as it earned net revenue of INR 12 crore in 2011, according to Shopclues’ statements.
The company was considered a profitable venture until 2013 when Sandeep Aggarwal, CEO of Snapdeal, got arrested by the FBI in San Jose. Aggarwal was taken into custody in connection with a trading case in his previous job. As a result, Sanjay Sethi was given all responsibilities and commissioned as CEO of Shopclues.
When Sandeep Aggarwal returned to India in the following year ( 2014), all responsibilities were taken away from him, sidelining him from other co-founders of the company.
For backing the company, Shopclues raised Series E funding round and amassed $100 million from investors, Tiger Global Management, GIC and Nexus Venture Partners after $100 million Series D funding round in January 2015.
In 2017, Sandeep Aggarwal enforced to leave the company when he publicly quarreled with his wife and co-founder, Radhika Aggarwal.
In November 2018, ShopClues reported a total income of $37.7 Mn (INR 273.3 Cr), an increase of 46 per cent from $25.81 Mn (INR 187.1 Cr) in the previous year. It also narrowed its net loss by 40 per cent to $28.17 Mn (INR 208.14 Cr) for FY 2017-18, reported Inc42.
In 2019, cash crunch like situation arose in Shopclues, thus, making it approach other companies to acquire its business. Originally, it was in discussion with Snapdeal but the transaction was not made between two parties. Apart from Snapdeal, it is said that the e-commerce company reached eBay as well, however, no results came out of the talks.
Later, on July 2019, the e-commerce company decided to sack approximately 150-200 employees.
Following this, the company finally found Qoo10 Pte Ltd as its acquirer in an all-stock deal. According to speculation, Shopclues was pegged at $100 million and thus, once a part of the unicorn club, become sank down and got acquired.
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