In what could be a major boost to financially struggling Snapdeal, its top investor Softbank is pushing for a sale to Flipkart, according to a report by Times of India. This could be a major boost for the already struggling online marketplace that was forced to sack about 600 employees last month. There were reports that Snapdeal might bring down the current employee strength below 1,000 from 2,500. Jasper Infotech Private Limited, which runs Snapdeal had also said that its founders Kunal Bahl and Rohit Bansal would take a 100% salary cut.
In an internal mail to the employees, Bahl said, “With all the capital coming into this market, our entire industry, including ourselves, started making mistakes. 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 had not 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,” he wrote.
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For Flipkart, this will be a much-needed push as it is facing a tough competition from Amazon in India’s online retail space. When contacted, Flipkart refused to comment saying that the news is just a market speculation. However, no official statement has come from Snapdeal or Softbank. Flipkart recently completed a $1 billion funding and after that was looking to hire another 1,200 people, specifically in the technology and engineering team. “In 2017-18, we are certainly looking to increase the headcount by 20-30% higher than the previous year. Our plan is to add additional employees mainly in three areas. Firstly, we will hire more people to expand our supply chain network. Secondly, we want to add in our engineering and technology team and the third area comprises new categories like large appliances, consumer electronics, furniture and grocery, among others,” Flipkart chief operating officer (COO) Nitin Seth had told FE.
Even though Flipkart was backed by some big names like Microsoft Corp., eBay Inc. and Tencent Holdings Ltd., in its recent round of funding, the valuation declined from $15.5 billion in 2015 to $10 billion in 2016. “We are looking to aggressively grow our supply chain network as we are expanding our reach in another 1,000 new PIN codes and set up 60 additional delivery hubs in the country mainly in the North-East region, West Bengal, Odisha and Bihar,” Seth added.
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On the other hand, Snapdeal has been facing a major crisis and has been forced to give up on its office space as well. Sources confirmed FE that process of selling a part of Delhi-based ASF Infrastructure in Gurgaon has been initiated and the negotiations are currently under away. However, Rajeev Bairathi, ED, Knight Frank India said that it won’t be easy to fill the space anytime soon.