E-commerce growth miscalculation: Simpl CEO takes responsibility for layoffs
Due to market uncertainty and an extended funding winter, startups have resorted to layoffs as a common measure to tighten their belts. In line with this, BNPL unicorn Simpl also reduced its workforce by 25%, resulting in over 150 employees being let go. This move was made to cut costs and extend the company's cash runway.
During an interview with CNBC-TV18, Simpl's Co-founder and CEO, Nitya Sharma, revealed that he had to make a difficult decision as the company had overestimated the growth of e-commerce.
Sharma explained, "I had to take the hard decision to say goodbye to very talented people who got us where we are today. One thing we realised as we were planning for next year was — the growth we were expecting in the e-commerce space in the next two years was definitely an optimistic assessment.”
“As we stood this year, we realised we need to become operationally more efficient so that we are able to focus on the most important customer priorities. There’s so much room to cover in the e-commerce space. The macro-economic condition last year was very different and allowed us to think we should probably hire a lot more people and work on many things parallelly,” he further stated.
The CEO clarified that there are no additional plans for workforce reductions in the company, and the primary focus will be on performance and business growth.
Simpl's revenue in FY22 surged over 17 times to Rs 31.63 crore, up from Rs 1.81 crore in FY21. However, the company's losses also increased significantly, ballooning 22.5 times to Rs 144.28 crore in FY22 from Rs 6.39 crore in FY21.
“Our revenues stand in mid-double digits million dollars for FY23. We are not looking at profitability in the next couple of years. Our business is such that if we want to turn profitable, we can in the next two years. We want to focus on efficient growth at the moment and investing in the growth of the customer, merchant base and technology,” Sharma told CNBC-TV18.
Simpl raised $40 million in December 2021, bringing its total funding to $83 million from multiple funding rounds. Despite this, the company has stated that it currently has no plans to raise additional funds in the near future.
“Our business is relatively capital efficient. Unlike a traditional payment company, we focus on merchants and our customers are retailers. What that enables us to do is run a very efficient business and we don't have the traditional burns that so many payment companies have around customer acquisitions. Currently, we are not planning to raise money and focusing on investing our resources efficiently. We also believe this is not the right market to raise funds in,” added Sharma.
Simpl has stated that it is currently working with 25,000 online retailers and has five million active users. The company has set a goal to double its merchant network to 50,000 by the end of 2023.
The company recently announced its collaboration with Klub, a Revenue Based Finance company, to offer convenient credit access to Direct-to-Customer (D2C) merchants, helping them meet their working capital needs. Through this partnership, merchants will have access to affordable interest rates and flexible terms, all through a seamless digital process.
The co-founder of Simpl also revealed that the company is currently in discussions with Open Network for Digital Commerce (ONDC) for a potential partnership. ONDC estimates that in India, over 12 million sellers depend on selling or reselling products and services for their livelihood, but only 15,000 of them have enabled e-commerce capabilities.
“I feel ONDC will make e-commerce bigger and make it more democratic. We are building all tools where retailers can deliver experience to users which is at par with large platforms. We are having conversations with ONDC to understand how we can work closely with them,” said Sharma.