Trouble comes in many forms, one is when Indian E-commerce startups wave pink slips
E-commerce has been trending in India for quite some time now. The number of start-ups making inroads in the e-commerce space is unbelievable. Fashion, technology, food, real estate, taxi, etc., there is no category that our young entrepreneurs have left out. Indians love the idea of sitting in the confines of their homes and buying any product online. With consistent advertising by top companies like Flipkart and Amazon the online market is gaining more and more traction. Following the example of bigger brands, small shop owners are now eager to get a taste of this blooming online growth.
So, the question stands – If the e-commerce market is expanding, then why are several online portals laying off hundreds of employees?
In 2015, Housing.com , a famous property rental online portal had to let go of 600 employees in a move to control their losses. After three months they had to fire another 200 employees. Restaurant listinggiant Zomato and food ordering TinyOwl had waved pink slips at least a 100 employees. After the shocking layoffs by Grofers last year, a reported shut down of its operations in 9 cities, promising hyper local delivery app, PepperTap , had followed suit this year and suspended operations in s6 cities and thereby, let go of 400 of their employees.
These layoffs are a side effect of a larger issue which all e-commerce players eventually face. If you look closely, there is a pattern followed. With funds pouring in from investors and with constant plans of expansion, there has been uncontrolled hiring of employees, hefty discounting and heavy advertising. While this strategy allowed players to stay ahead of the competition, it has led to growth in loss margins. Though there is increase in revenue every year, it still cannot compare with the high losses the companies must explain to their funders. The layoffs are a bold move by companies to switch to a more stable business model. This means rethinking their hiring capacity and revisiting their rampant advertising tactics. E-commerce companies are a long way off from reaching their break-even mark, and till they conquer this goal, the situation will be continue to be unpredictable, both for employees and the company.
The layoffs are a big siren to students who have now become weary of joining e-commerce startups. Though there yet isn’t a fool-hardy strategy for a profitable e-commerce system, the recent change in policies is a sign that e-commerce startups are focusing their resources into customer retention and improving the features of their app/product.