DealShare to layoff 130 employees as it decides to shut B2B unit
Tiger Global-backed e-commerce platform DealShare has made the strategic decision to wind down its business-to-business (B2B) unit in the coming months, according to anonymous sources cited by Moneycontrol. This move is in response to the B2B division’s failure to deliver the desired results for the company. DealShare has already initiated the process of scaling down its B2B operations and has also announced a new round of layoffs as part of its cost-cutting efforts.
This cost-cutting and restructuring effort comes after previous reports had indicated that DealShare was consolidating its operations. The company had been in the process of exiting certain markets and had even decided to shift its corporate headquarters from Bengaluru to the Delhi National Capital Region (NCR). These measures were expected to result in further workforce reductions. The decision to relocate its headquarters had been made earlier, following DealShare’s earlier workforce rationalization in January, which had already seen around 100 employees being let go.
The move to wind down the B2B unit and the ongoing restructuring efforts suggest that DealShare is actively adjusting its business strategy to address challenges and streamline its operations, in alignment with its evolving market dynamics and goals.
During a company-wide townhall meeting earlier this month, DealShare made the announcement that it would be reducing its workforce by approximately 120-130 employees. This staff reduction represents just over 10 percent of the company’s total workforce. Prior to this decision, DealShare had a workforce of around 1,100 employees. The move to lay off a portion of its staff is part of the company’s efforts to restructure and adapt its operations to better align with its strategic goals and market conditions.
Many of the employees affected by the layoffs are reportedly from DealShare’s B2B division, as confirmed by the company to Moneycontrol. The decision to streamline its workforce and focus primarily on the business-to-consumer (B2C) side of the business was made to ensure the company’s continued relevance in the market.
A spokesperson for DealShare stated, “We took a conscious decision to focus on the B2C business at this point to stay relevant to our consumers in the market. We have taken decisions of realigning our budgets, reorganizing teams, and locations, etc. Our immediate priorities will be to quickly organize the teams towards execution, complete the non-tech teams’ transition to Gurugram, prioritize key deliverables, and swing into action.”
While the B2B division was smaller in scale compared to the B2C unit, it still contributed significantly, accounting for approximately 20-25 percent of DealShare’s total revenue. In the fiscal year 2022 (FY22), the company reported revenues of around Rs 1,930 crore, marking an eightfold increase year-on-year. However, during the same period, the company’s losses also widened significantly, rising by 540 percent to approximately Rs 430 crore.
The company expressed its commitment to supporting the affected employees through the transition, both financially and by leveraging its network to assist them in finding suitable opportunities. However, specific details regarding the nature and extent of the support provided to the affected employees were not disclosed in the statement.
DealShare, founded in 2018, has been navigating challenges as it seeks to establish its product-market fit (PMF). The company has been undergoing strategic changes to strengthen its presence in both online and offline markets. Notably, it has been focusing on consolidating its operations in select markets such as Jaipur, Delhi NCR, Lucknow, and Kolkata. Simultaneously, it has been exiting unprofitable regions, including Maharashtra and others.
In addition to its geographical focus, DealShare has been transitioning from its original model as a group buying platform to position itself as a direct-to-consumer (D2C) startup. This shift in focus signifies a change in its business strategy and target market. DealShare primarily caters to the low-income demographic of shoppers, offering a range of products including groceries, general merchandise, and fashion items, among various other stock keeping units (SKUs).
However, amid these strategic changes and restructuring efforts, DealShare faced the departure of its CEO and co-founder, Vineet Rao, in July. His exit paved the way for a new professional leader to assume control of the business, although the company had yet to make a formal announcement regarding this appointment at the time of the report. These developments reflect the company’s efforts to adapt to market dynamics and achieve a more effective business model and market positioning.
Under its business-to-business (B2B) model, DealShare primarily engaged in selling goods to kirana stores, which in turn sold these products to individual customers. The company also leveraged the network of these kirana stores to facilitate last-mile deliveries, enhancing its reach and service capabilities. In the B2B segment, DealShare faced competition from platforms such as Citymall, backed by Accel, Udaan, which received funding from Lightspeed, and a few other players operating in a similar space.
DealShare was co-founded by Rajat Shikhar, Vineet Rao, Sankar Bora, and Sourjyendu Medda. Over the course of its operations, the company successfully secured significant funding, with a total of over $390 million raised from notable investors including Alpha Wave Global, ADIA, WestBridge Capital, Matrix Partners India, and others. In its most recent funding round in January 2022, DealShare raised $165 million, and it achieved a valuation of $1.7 billion according to Tracxn, a private markets data provider. This valuation reflected the company’s growth and potential in the e-commerce and retail space.
