Grofers lays off 10% of workforce, revokes fresh appointments in e-com crisis

  • Sunny Sen, Hindustan Times, New Delhi
  • Updated: Jun 30, 2016 18:21 IST
Grofers is known to take radical decisions when it comes to controlling cost. (Mint file photo)

Grofers, the country’s second-largest online grocer, has decided to downsize its team by 10%, or 350 staff, as it seeks to control escalating cost.

Apart from the downsizing, the company has also revoked 67 letters of appointments. “We are laying-off a few people. The cancellation of appointments is part of a broader downsizing program. Most of the new hires were to join the customer care and cataloguing team, where most of the downsizing is happening… Asking them to leave after induction would have been worse,” said Albinder Dhindsa, co-founder of Grofers.

Some of the jobs that were revoked were given to postgraduate students. A major social media outrage broke out on Twitter and Facebook as Grofers cancelled the appointments two days before the joining. Hashtags #Grofersisacheat and #BoycottGrofers were created.

Rohan Coelho, a student who got an appointment letter, wrote on Facebook that Grofers has not offered a single penny in compensation, after making him go through two months of formalities for the job.

Grofers is known to take radical decisions when it comes to controlling cost. A month after Grofers raised $120 million in November, it shut operations in nine cities.

“We faced management issues to run so many cities so we shut them,” Dhindsa had told HT in an interview earlier.

This time he said, “Looking at the market we know it going to be a low growth market for a while. Earlier we had thought of spending in marketing to grow aggressively.”

Read | Big layoffs at India’s online start-ups; is the bubble bursting?

In the online grocery space, after BigBasket, Grofers has raised the maximum capital, of $165 million (Rs1,120 crore) from Softbank, Tiger Global, Sequoia Capital and others. “We will have to be more cautious about how we spend,” said Dhindsa, especially after PepperTap, which raised about $51 million, shut down its grocery business.

Grofers revoking of offer letters comes a month after Flipkart, India’s largest e-commerce company, dishonoured the joining of management graduates.

Read | It’s Grofers vs BigBasket in the grocery delivery app war

For e-commerce, 2016 has been a tough year as funding freezes. Other internet companies such as Hopscotch, CarDekho, Roadrunnr and Click Labs have also deferred joining dates.

Indian Institutes of Technology (IIT) have blacklisted six Indian startups over hiring issues and decided not to allow startups to appear on the first day of the hiring, popularly known as Day Zero.

The startup space in India is under siege. Since January, about 20 startups have shut down, mostly after raising a round or two of capital. In 2015, the number was 14-15.

Also read | Why Indian startups are in a reality check, not bubble

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