Valued at $1 billion in heyday, ShopClues sold for just about $100 million

This was the year ShopClues planned to launch an initial public offering. On Thursday, the Gurugram-based e-commerce was sold for just about $100 million, less than a tenth of its valuation of $1.1 billion in happier days.

After multiple attempts at selling itself, including to larger e-commerce player Snapdeal, ShopClues has found a buyer in Singapore-based e-commerce platform Qoo10 in an all-stock deal. It also reportedly held talks with Paytm Mall, eBay and Flipkart for a potential sale over the past year.

One of the youngest and most promising unicorns, or start-ups valued at $1 billion and above, ShopClues has had its share of controversies, the most public of which was a fall-out between its co-founders Radhika and Sandeep Aggarwal, who were earlier married to each other.

Sandeep accused Radhika of not giving him credit for running the firm and the spat played out through public Facebook posts and media reports. In 2015, Sandeep had to step down as chief executive after being charged with insider trading allegations in the US. He later founded Droom, an online marketplace to buy and sell used automobiles.

Sanjay Sethi, the other co-founder, and Radhika took over the reins of the firm. But people in the know say though Sethi was the technology brain, he was not hands-on like Sandeep, who was the go-to man for raising investments.

ShopClues was funded by, among others, GIC, Tiger Global Management and Nexus Venture Partners. There are few instances of a company being sold for such a low amount after the kind of valuation it once had.

Qoo10 services small and medium enterprises (SMEs) through its localised online marketplaces in Singapore, Indonesia, Malaysia, China, and Hong Kong. It plans to expand into other Asian countries, ShopClues said on Thursday. “This partnership presents new strategic opportunities for both companies, as it opens up cross-border opportunities,” the firm said.

The merger has been approved by board of directors and major shareholders of both the companies.

However, in a market already grappling with the extensive reach of the two large players — Amazon and Flipkart — and more specialised ones like BigBasket, and a slew of new Chinese entrants such as Club Factory and Shein, it was not immediately clear what unique proposition Qoo10 would bring to the table.

Tier-II, -III and -IV cities, which ShopClues serviced extremely well at its peak by keeping costs low, are also being targeted by Flipkart and Amazon. ShopClues was unable to match the aggressive expansion of its larger competitors.

Earlier this year, there were reports that said ShopClues was being investigated by the Enforcement Directorate for funds received from its US-based parent Clues Network.

Over the past three years, the company has tried several times to raise funds, but apart from its biggest investor Tiger Global, none of the other investors showed interest in further funding. In the past two years, ShopClues also tried to pivot its business to a more enterprise focused model from its core consumer facing marketplace.

In July, it said its enterprise business was 15 per cent of its revenues and its social selling platform Ezonow had crossed 800,000 in resellers’ base.

The cash-strapped company has been scouting for fresh investments, having survived on multiple bridge rounds from its existing set of backers, and later looking for buyers after fresh financing rounds failed to materialise.

Clueless on where to get funds, ShopClues may shut shop in a few months

The roller-coaster ride of Shopclues, the country’s fastest growing unicorn heading towards an initial public offering (IPO), may come to an abrupt end soon.

According to sources, the company which at one point had a valuation of $1.1 billion and prided itself of being the market leader in the unbranded goods segment, may not have more than a few months of run time.

Company insiders fear either a complete shut down or severely shrunk operations running on skeletal staff. While at one point, the company had over 1,000 employees, the numbers came down to 500 in the last few months.

According to sources, the company, which has laid off more than 200 employees over the last few weeks, is planning to let go off another 150 people within the next few days. The Gurugram-based company is planning to bring down the employee strength to less than 150, it is learnt.

In response to a detailed questionnaire on cash crunch it is facing and possible layoffs, a company official just said that technological advances have ‘outplaced’ 15 per cent employees. However, sources said that people getting laid off amounted to more than 65 per cent.

“In the last two years, ShopClues has continued its journey to enable micro, small and medium enterprises (MSMEs) and service tier-III and tier-IV consumers operate from its platform. It has launched multiple lines of businesses besides its core B2C marketplace which has gained traction in the last two years. Our enterprise business is now 15 per cent of our revenues and Ezonow, our social selling platform, has crossed eight lakh in reseller base,” the company spokesperson said.

The company claims to have reduced losses and even went on to indicate that it keeps things transparent with employees and ‘over-communication’ is part of the culture. But it did not give any explanation for the recent job losses.

“During this period, we have reduced our losses by 85 per cent via cost reduction and contribution expansion. Our recent restructuring allowed us to leverage our technology to reduce operational costs and we have outplaced about 15 per cent of our workforce, mostly in operations. We pride ourselves on our work culture and empathy for our employees; this has been always been our hallmark. The management is sensitive to the needs of our workforce. Transparency, over-communication and empathy define our culture. Besides our contractual obligations to our employees, we also ensure 100 per cent out placements to our employees,” the spokesperson added.

From claims of being a profitable operation by 2017, to launching an IPO in 2018, the company has from time to time made a number of claims. Over the last three years, it has several times tried to raise funds. But starting from its biggest investor, Tiger Global, none of the investors showed any interest in any further funding round.

In an interview with Business Standard in 2017, Sanjay Sethi, co-founder of ShopClues, said the company does not depend for funds on anyone. “Our war cry is to take the company to an IPO and make it profitable. When one is sovereign or in this case listed, then it does not have to depend on anyone for money. At least at the stage we are in, it is not about valuation any more, it is about terms. It is a world different from who raised money at what value. I am emphasising on terms, as that is how alliances happen or do not happen. It does not matter whether Tiger has interest in India or not. We are not Tiger and Tiger is not us. Again, it does not matter whether SoftBank has interest or not. They can bet on the first horse or the second horse; we are not at all concerned. We will not depend on external capital; if we have to raise money, we will raise it from the public market,” he had said.

The management has, over the last year and a half, been trying to sell off the company and was in talks with the likes of Flipkart and Paytm. But the talks ended without any deal.