Indian e-commerce industry is growing exponentially and expected to touch 50–55 Billion USD mark by 2021. A market study indicates e-commerce sales in India were around $14-14.5 billion in 2016. Despite such growth, Indian e-commerce industry is still at nascent stage, and alike to every start-up it has its own set of challenges to deal with.
In last couple of days we saw, Jasper Infotech Pvt. Ltd, which runs Snapdeal, has decided to lay off dozens of employees across the e-commerce marketplace and its subsidiaries, mobile wallet Freecharge and logistics wing Vulcan Express in a bid to cost cutting and conserve cash. Not only this, Snapdeal Co-founders Kunal Bahl and Rohit Bansal took the decision to have 100% salary cut till the firm become profitable.
Speaking on same, Ronesh Puri, MD, Executive Access said, “The move of the promoters not to take salary till the profitability improves is laudable. The layoffs will impact all layers of the company. It will impact the mood of the ecommerce industry as others will tend to replicate this. The fact of the matter is that raising funds is becoming increasingly difficult as investors look for visibility on profitability.”
Snapdeal is not alone others players such as ethnic online retailer Craftsvilla, fashion portal YepMe and Tolexo which decided to hand over pink slips to is employees.
No doubt, such mass lay-offs create a sense of confusion which is not good for the industry over all. And, e-commerce is the sector where investors have pumped in billions of dollars. But, this scenario could a temporary phase and could be over soon like a bad dream. Let’s understand how..
Why lay-offs may not be alarming?
While talent was looking at entering ecommerce because of excitement on stocks, now the pendulum appears to have swung to the other side with talent wanting to move out as business is becoming tougher. This is also a good time for organizations to pick talent from the ecommerce industry given the mood in the industry.
The spread of e-commerce has led to the rise of several niche players who largely specialize their products around a specific theme. As per Wikipedia source, As many as 1,06,086 websites are registered daily and more than 25% are for niche businesses. This phenomenon generates a humongous requirement of talent; and, such lay-offs give an opportunity to niche players to pick-up the talent.
For example, Amit Daga, Founder & MD, Deal Kya Hai? is keen to acquire talent with experience from these kind of layoffs. Speaking on same, he said, "The layoff scenario is not good for any industry but is also an opportunity for players like us to acquire the talent with right kind of experience in the similar field. For a growing entity it helps to bring in the expertise which helps to streamline the operations and avoid the mistakes of larger players."
In India, e-commerce is at stage where business recalibration and restructuring is an ongoing process. And, such lay-off scenario is a result of restructuring at some companies which should be over in the time to come.