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ShopClues, once a unicorn and e-commerce platform in India, has seen a significant decline in its operating scale since its acquisition in FY20. According to financial statements filed by its Indian entity with the Registrar of Companies, the company’s operating scale dipped 48% to Rs 59.9 crore in FY22 from Rs 115.1 crore in FY21. This is a worrying sign for the company and suggests that it may be on the verge of oblivion.
Commission earned on sales, fulfillment, packaging, and merchant listing fees accounted for 88.3% of the firm’s total operating revenue which stood at Rs 52.9 crore. Around Rs 7 crore came from parent company Clues Network Inc against technology support.
Shipment charges formed 27.5% of the overall expenditure which contracted by 37.9% to Rs 30.7 crore in FY22 from Rs 49.4 crore in FY21. Since the company has been downscaling its operations, its employee benefit and advertising costs shrank 56.1% and 40% to Rs 27.6 crore and Rs 24.8 crore respectively during FY22.
ShopClues booked Rs 15.5 crore as miscellaneous expenses which include IT support, software development, office expenses, transaction charges et al. Its overall costs shrank by 35.9% to Rs 111.7 crore in FY22 from Rs 174.30 crore in FY21.
The all-round contraction means that ShopClues’ losses remained stable at around Rs 50 crore during FY22, and its EBITDA margin worsened to -72.03%. On a unit level, the firm spent Rs 1.86 to earn a single rupee. This is a concerning situation for the company and indicates that it may need to take drastic measures to turn things around.
ShopClues has been a zombie firm for some time, seemingly keeping some business going from memory and for little to no benefit to anyone but a few people. The firm, which at its peak was virtually a thrift store selling all sorts of knick-knacks with little checks on the provenance of its sellers, probably serves a purpose for some to offload their goods even now. But there is no question that the end is nigh for this version at least, and the sooner it is put out of its misery, the better it will be.
Despite the gloomy outlook, there may still be hope for ShopClues. The company has already started downscaling its operations, which suggests that it is taking steps to address its financial woes. However, it will need to do more than just cut costs to turn things around. The company will need to focus on building a sustainable business model that can generate revenue and profit in the long run.
Moreover, the COVID-19 pandemic has accelerated the shift towards e-commerce in India, and this presents an opportunity for companies like ShopClues. If the company can adapt to the changing market conditions and leverage its strengths, it may be able to revive its fortunes.
In conclusion, ShopClues’ financial statements reveal a continuous erosion of its scale and decline in operating revenue, resulting in stable losses and a worsening EBITDA margin. The company has been downscaling its operations, leading to a reduction in employee benefit and advertising costs. ShopClues has been a zombie firm, keeping some business going but serving little to no benefit to anyone except for a few people. While the company may still serve a purpose for some sellers to offload their goods, the end is near for this version. It remains to be seen if ShopClues will be able to turn things around and regain its position as a major player in the Indian e-commerce market.
