New Delhi, April 9 (IANS). ShopClues, which was once one of the leading e-commerce companies in the country, is now among the few startups whose valuations have fallen to the lowest level.
Gurugram-headquartered company ShopClues had a valuation of around $1.1 billion in 2016, but due to business challenges, Singapore-based company QOO10 acquired it in 2019 for just $70-100 million, which was 90 percent less than its earlier valuation.
ShopClues, established as “Online Chandni Chowk”, achieved initial success by targeting price-sensitive consumers in Tier-II and Tier-III cities, where it offered unbranded and low-cost goods to customers.
This strategy helped ShopClues expand rapidly at a time when larger rivals like Amazon and Flipkart were primarily focusing on metros.
However, this model of ShopClues has collapsed when both the giants expanded aggressively into smaller cities with better logistics, higher discounts and stronger customer trust.
As competition intensified, ShopClues started losing its market share. Additionally, its heavy reliance on unorganized vendors soon led to quality control problems.
The platform later gained a reputation for counterfeiting and low-quality products, leading to very high return rates (estimated at 30-40 percent) and reduced consumer confidence. Rival companies, on the other hand, invested heavily in reliability and service.
The company’s troubles were compounded by internal turmoil. Co-founder Sandeep Agarwal stepped down following insider trading allegations in the US, leading to Radhika Agarwal and Sanjay Sethi taking over the leadership of the company.
The subsequent public dispute between the founders also served to reduce investor confidence.
Financial pressures soon transformed into a “cycle of decline”. In an effort to show profits ahead of a potential IPO, ShopClues drastically cut marketing expenses, resulting in a sharp decline in gross merchandise value.
Several attempts to raise new investments failed, with even existing investors hesitant to commit additional capital.
The company also considered strategic changes, including the creation of an enterprise-focused vertical and expanding its reseller platform, but these efforts were insufficient to halt the decline.
Regulatory scrutiny, including reports of the Enforcement Directorate probing some fund flows, added to the uncertainty.
Meanwhile, after resigning as chief executive in 2015, Sandeep later founded Droom, an online marketplace for buying and selling second-hand automobiles, which is facing GST probe in Pune, Jaipur and Haryana.
However, the company said that “Droom will fully comply with all applicable laws and regulatory disclosure requirements.”
–IANS
abs/
