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Why Shopclues is Fading Away in E-commerce Industry

As Shopclues has failed to attract buyers, the company has devised another plan to avert losses. It has decided to trim its workforce by sacking 200 employees. 
BY Jaspreet Kaur
Feature Writer, BusinessEx
Jul 19,2019

As the Indian e-commerce industry is expanding rigorously and attracting foreign investors, investment, merger and acquisition and expansion plans have become a commonplace now. Besides the high-yielding e-tailers like Flipkart and Amazon, some are grappling to make a profit. Shopclues, one of the homegrown e-commerce companies, is presently striving to keep the business afloat. 

The e-commerce company, which invariably proclaimed to sell products at wholesale rates, has faced financial losses in the past two years. According to business intelligence firm, Tofler, Shopclues reported total revenue of INR 273.3 crore whilst a loss of INR 208.14 crore in the financial year 2018. In another media report, it was reported that the e-commerce company made a total revenue of INR 271.12 crore and losses of INR 208.14 crore. 

As a result, the e-commerce platform is not glistening anymore and lagging in the race.

Looking for an Anchor 

Earlier this year, there were speculations that the e-commerce firm, Snapdeal would acquire Shopclues. However, the acquisition was not made owing to Shopclues’ large count of liabilities. 

According to the daily news, Entracker, Snapdeal has decided to pull out of discussions relating to the purchase of ShopClues. Further, two sources told the daily news, “In addition to the unquantified risks, the outstanding liabilities are in the range of $40-50 million, out of which at least $25-30 million are payable immediately to operational creditors including marketing, logistics, and technology vendors.” 

Further, the cited media report revealed that Shopclues were trying merger option with other online platforms such as Limeroad, Voonik and Craftsman. However, none of the companies showed interest in its business proposal owing to its massive losses. 

Paytm Mall, a retail division of Paytm, Amazon and Walmart were also being reached out to sell the business on a loss. However, the business proposal was not considered by any of the companies. 

Concentrating on Profitability by Sacking Employees 

As Shopclues has failed to attract buyers, the company has devised another plan to avert losses. It has decided to trim its workforce by sacking 200 employees. 

According to media reports, the e-company may not have offered any severance package to sacked employees and will disburse salaries till July 18 only. 

“Our customer NPS has been increasing steadily in these two years while our workforce has dropped by 50 per cent in the same period. Our focus has been profitability and this year we plan to achieve that,” Shopclues’ spokesperson told the daily news, Inc42. 

“We ensure 100 per cent out placements to them – our goal is to ensure within a week more than 80 per cent of impacted employees gets placed. We have a strong network of companies that we rely on each other to exchange talent and that’s what we are focusing on,” the spokesperson further added. 

In the last two years, Shopclues has witnessed a sharp decline in consumer orders, going below 30,000 per day. Consequently, e-commerce started getting affected and sought various methods to consolidate its rank. However, weak financial reports and surge in lessors worsen the conditions for the business. 

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