MUMBAI (Reuters) – Indian online marketplace Snapdeal is to lay off 600 employees and its founders will forego their salaries as the company struggles to turn a profit in a market increasingly dominated by rivals Flipkart <IPO-FLPK.N> and Amazon <AMZN.O>.
The CEO of Snapdeal, backed by Japan’s SoftBank Group <9984.T>, said the company had made some errors in the past and tough decisions were needed to bring it back on track to profitability.
“We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth,”
Chief Executive Kunal Bahl said in an email to staff seen by Reuters. “Sadly, we will also be saying really painful goodbyes to some of our colleagues in this process.”
Despite having fallen behind its rivals in India’s burgeoning e-commerce market, Bahl told Reuters earlier this month he saw a clear road to profitability in the next two years.
A company source said a combined 500-600 people will be laid off from Snapdeal and its logistics business Vulcan Express and digital payments unit FreeCharge.
Bahl also announced that he and Snapdeal co-founder Rohit Bansal were foregoing their salaries as all resources should be used for driving growth.
Many other executives had offered to take a cut in salary, he added.
The company said last year it employed around 10,000 people.
Snapdeal was valued at $6.5 billion after a fund-raising last year but its valuation is under threat like its bigger rival Flipkart, which has been marked down by investors.
E-commerce in India, one of the world’s fastest growing internet services market, has largely been driven by steep discounts, resulting in investor markdowns due to concerns about profitability.
Snapdeal reported a loss of 29.6 billion rupees ($14.93 million) in the financial year to March 31, 2016, according to regulatory filings.
($1 = 66.9650 Indian rupees)
(Reporting by Sankalp Phartiyal, editing by Louise Heavens)