MUMBAI/NEW DELHI (Reuters) – Wanting to calm employees rattled by reports of the cash crunch, the founders of Indian online retailer Snapdeal go instantly to them with a string of townhall meetings in past weeks, in accordance with sources, promising profit and brushing off takeover talk.
The sources, knowledgeable about the audience, declined to be named as being the meetings just weren’t public.
Like most e-commerce players in India, Snapdeal is burning cash to sustain discounts – and customers – from a cut-throat online market. Speculate the telephone number three player, it’s also under growing pressure from investors and its particular own employees to look at its bottom line, along with share of the market.
One of the sources said there was at the very least five townhalls in recent weeks, with founders Kunal Bahl and Rohit Bansal delivering motivational speeches.
"It had been only profitability and profitability," one source said, describing methods questions from employees whether or not the company would have been a takeover target.
India's booming online retail sector is led by homegrown player Flipkart – now with Amazon (NASDAQ:AMZN), following your U.S. giant overtook Snapdeal's sales volumes in 2009.
Thanks for its deep pockets, Amazon has been a progressively prominent investor in India, compensating due to the mistakes in China, where this has been practically squeezed out by aggressive local rivals which has a better grasp of demand.
Snapdeal sought funding support in China, from Chinese funds and Alibaba (NYSE:BABA) Group Holding Ltd, already an investor, sources with knowledge of the issue said.
It has to date keep returning empty handed.
Snapdeal expects in order to turn profitable in two many is eyeing a niche listing surrounding the same time.
But the China setback, along with a valuation which has dropped coming from a peak of $6.5 billion in 2009, has unsettled some staff.
Two employees and three people aware of Snapdeal's internal discussions said there was clearly concerns across the group's direction, along with over contradictory messages from investors – some seeking profit, others growth – and, increasingly, over potential senior-level departures or cuts.
Headhunters like Sinosh Panicker, an accomplice at Hunt Partners, said some of his clients had witnessed an increase in applications from Snapdeal employees.
Some employees cite concerns as soon as the departure of 600 staff in February, laid off from Snapdeal, its logistics arm Vulcan Express and payments unit FreeCharge.
Snapdeal declined to investigate staff exits or sentiment, but said its annual appraisals were currently underway, and staff can be offered incentives.
In directions to employees late a few weeks ago, co-founder and ceo Bahl said that Snapdeal, by which Japan's SoftBank can be the, was on the journey, despite differing views from some investors.
"Investors in this industry must understand that driving indiscriminate growth whatever it takes doesn't create long-term value," Bahl wrote from the letter.
A spokeswoman for SoftBank in India declined comment while other Snapdeal investors – Nexus Venture Partners and Kalaari Capital – failed to respond to Reuters queries. Alibaba have not commented on Snapdeal.
Snapdeal clocked up losses of 29.6 billion rupees ($456.5 million) inside the fiscal year to March 31, 2019. Flipkart's wholesale unit and online marketplace made a combined loss in 28.5 billion rupees inside the same period.