Shopo was acquired by Snapdeal in 2013. Snapdeal also announced in 2015 that it would invest $100 million in the handicrafts market. That plan may be put on hold if the shutdown of one of its handicraft acquisitions is anything to go by. However, after the acquisition, Shopo relaunched and featured more than just handicrafts goods.
The handicraft company said on its blog post that it will be shutting down on 10th February, 2017, citing reasons such as a the C2C market not being robust enough for Shopo to be economically viable, although the company claims the Indian e-commerce industry is growing.
One such case in point is the entrance of Paytm into the e-commerce sector with investment from AliPay and Alibaba. The e-commerce entity named "Paytm E-Commerce" has an estimated valuation of $1 billion even before launching.
On 3 February a news report signalled possibilities of Snapdeal resizing and restructuring, and that included management salary cuts of 25 percent, slashed budgets for marketing and affiliates, and off-loading of FreeCharge employees.
“The company had posted a 150 percent increase in loss in the last financial year. The losses increased from rupees 1328 crore in the year to March 2015 to rupees 3316 crore in the year ended 31 March 2016," the report said.
Prior to this, Snapdeal also pulled the plug on another acquisition, Exclusively.com, a premium fashion and luxury goods seller.
Shopo’s Loss Maybe Kraftly’s Gain You may not have heard of Kraftly, but with Shopo closing down, they win.
According to Saahil Goel, cofounder of BigFoot Retail Solutions and incidentally of its three product companies Kraftly, KartRocket and ShipRocket, Kraftly, much like Shopos, is a C2C e-commerce platform. Krafly connects indie sellers and small boutiques with a social network oriented buyer base.
In C2C or in the individual e-commerce space there was just Kraftly and Shopo competing. Amazon is eyeing the space, but is still nascent and available for book and electronics only in Bangalore, according to Saahil.
Speaking to BW Businessworld, Saahil said, “With Shopo out of the running, yes, I suppose, it mostly leaves us [Kraftly] at the forefront.”
“The sign up of sellers has increased around the time the shutdown of Shopo was announced. Usually we have about a 1,000 new sellers a week, but last week we noticed about 2,000 sellers signing up. We will have to wait and see what the reason is, whether the registration is organic,” said Saahil. But the Shopo connection is a strong possibility.
Meanwhile, here’s how Team Shopo signed out of business: “We started, an year and a half ago, from a small conference room with our mission to enable small and individual sellers across India to sell online. In this short time, we have together discovered the dynamism and vibrancy in the C2C space in India. We thank you for your support and feedback that enabled our young team to help more than 2 lakh sellers start and grow their online shops."
The blog further said: "The e-commerce market in India will continue its robust growth. However, we realize that it will take some more years for a broader ecosystem to develop around the C2C segment. It is tempting to go on, but it is often beneficial to pause, take stock and plan ahead for greater success. It is time for us to pause the Shopo journey for now.”
It’s always sad to see a startup die before it blooms. The e-commerce survival game has just got tougher.
BW Reporters
Regina is a reporter for BW Businessworld. In her previous assignments, she has worked with Independent television Network as a news anchor and reporter in Sri Lanka
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