Confirming the development, Dealshare founder Sourjyendu Medda said the decision is linked to its business plan for the next financial year with focus on profitability.
“Given the massive market downturn that started early-to-mid last year, we had to rethink our business strategy and correspondingly make changes to our execution plan,” he told ET. “From a strong focus on growth to achieve a large market share, we made substantial changes to our plans to focus on first driving profitability.”
The move has helped the firm, backed by Tiger Global, Matrix Partners and Alpha Wave Global, reduce its monthly burn “to less than 40% of our peak burn” and increase its cash runway – or, the time until cash balance runs out at the current burn rate – to close to four years, Medda said.
With this development, Dealshare joins a growing number of startups that have fired employees in the new year to cut costs and rationalise operations amid a prolonged funding squeeze and growth slowdown.
Dealshare has seen its annualised gross merchandise value (GMV) run-rate drop by one-third to around $600 million from its peak GMV run-rate of $900 million (based on current dollar rate) last year, people aware of the matter told ET.
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The firm “has also seen its gross sales drop as it has been trying to cut down on burn”, one of them said.Medda said Dealshare has reduced its focus on several initiatives and contained its geographical spread, which would have needed cash investments for long “before becoming totally profitable, resulting in our gross revenue getting rationalised to close to 60% of our peak revenue”.
The Bengaluru-based firm had expanded to about 150 cities and towns last year and it has now paused operations in bottom 20% of these.
Started by Medda, Vineet Rao, Rajat Shikhar and Sankar Bora in 2018 as a group buying platform, Dealshare has been repositioning itself as a direct-to-consumer ecommerce firm, offering a range of products to low-income consumers. It sells grocery and other essentials along with general merchandise and some fashion items largely in the Rs 300-400 average selling price segment.
The firm also supplies goods to kirana (corner) stores along with building a B2B2C model whereby customers can buy goods they find online at a nearby offline kirana store that the company has partnered with.
Bulk buying model is now a negligible part of its total business.
Dealshare became a unicorn in January last year after closing a $165-million funding round from Tiger Global, Alpha Wave and others.
Last month, it roped in former Big Bazaar chief executive Kamaldeep Singh as president of its retail business. At the time of Singh’s appointment, Rao had said Dealshare was clocking about 400,000 orders a day.
Startup layoffs
Dealshare’s job cuts underscore the growing trend among startups looking to restructure operations and carve a path to profitability. Startups like ShareChat, Swiggy, Dunzo, Rebel Foods, Innovaccer and others have fired scores of employees, citing a tough liquidity market, overhiring and overestimating growth for the year.
“Our over-hiring is a case of poor judgement and I should have done better here,” Swiggy chief executive Sriharsha Majety told employees last week after firing 380 of its staff.
(Illustration and graphics by Rahul Awasthi)