India’s big e-commerce boom is showing signs of slowdown. A report in a leading daily today says at least two major online retailers have let go of a sizeable chunk of employees. Jabong and Flipkart, two of the biggest names in online retail in India, have turned their attention to cutting costs after long focussing on getting new customers through a highly service-oriented model.
Nearly 250 employees, approximately one-tenth of Flipkart's staff, are being shown the door from the Bangalore-based retailer, the report said. Over at Jabong, a similar number of the workforce have been let go even though they employ half the number that Flipkart does. The Indian online retail segment is growing at breakneck speeds, with revenues estimated to go up to Rs 10,000 crore this year, which represents a near 50-percent growth, according to the Internet and Mobile Association of India.
Flipkart, Jabong and others are reportedly letting go of many employees (Image credit: Getty Images)
“People are being let off every month,” a Flipkart employee was quoted as saying by the newspaper. The employee was reportedly sacked in April and said that most of those who been let go are from the supply chain, logistics and call centre teams. Both companies state they continue to hire despite the sackings, but industry executives say that such sackings in the e-commerce industry are unprecedented. Inkfruit, another e-commerce site which sells apparels and accessories has also asked some 80 employees to pack up, according to the report.
The slowdown in the online retail sector comes at a time when gross margins at many companies are in the negative territory. An estimated 70 percent of the company’s revenue is used to acquire new customers. “The period of land-grabbing is over. Now there is investor pressure to achieve efficiency and positive economics per transaction,” Pearl Uppal, co-founder of early stage investment firm 5Ideas, said.