Snapdeal is expected to lay off almost 30% of its staff, a move that will affect 5000 contractual workers and 1000 direct employees.
The downsizing will help in cutting cost drastically as the investment coming in has largely decreased. Snapdeal has already begun with the laying off process.
In February 2016, Snapdeal had laid off approximately 200 employees. At the time of its fundraising round, the Softbank- funded e-commerce company was valued at $6.5 billion.
The company’s employee-related expenses rose to Rs 911 crore in FY 2016, up 148% from the previous fiscal. Employee expenses are the largest cost for Snapdeal after marketing and advertising. But unlike the latter, which is a variable cost, the wage is a fixed cost.
For the financial year 2015-16, the company’s total sales grew 56% to Rs 1,457 crore, but losses more than doubled to Rs 2,960 crore.
The decision to further reduce its workforce also comes on the back of the company’s decision to shut down Shop, the Etsy-like online consumer-to-consumer platform for small sellers that it relaunched in 2015, and in which chief executive Kunal Bahl had said the company would invest $100 million.