MobiKwik has shut down two of its offices in India, laid off several employees, and scaled back its retail business, sources have told MediaNama. A current employee said that upto 200 employees and contractors have been asked to leave in all. MediaNama was unable to verify this number from other sources, and MobiKwik’s founders have not responded to multiple requests for comment.
According to sources, MobiKwik’s Chennai office, which housed 5-10 employees, according to one person familiar with the matter, was shut down. This was likely a satellite office, like its other offices in Pune, Mumbai, Hyderabad, Kolkata and Mumbai, where the employee strength is not very high. MobiKwik is headquartered in Gurgaon where most of its staff works out of.
MediaNama has reviewed a document which states that MobiKwik will not expand its business in particular verticals (sources say auto, milk and food and beverages + retail) “hence the need for the team ceases to exist.” Multiple sources said that MobiKwik employees and contractors were let go of on the spot, either through a phone call, a letter or both. They were asked to not come to the office from 15 November after surrendering all company equipment. They have also been promised a 2 month severance package, to be paid in 45 days.
MediaNama has contacted Upasana Taku and Bipin Singh, MobiKwik’s co-founders, and will update this when we hear from them.
According to sources, the following reasons could be behind MobiKwik scaling back its retail business and operations:
High marketing and operational costs, lack of funding
MobiKwik has raised at least $113 million since its inception in 2009. It had been spending a considerable amount of money ($15-20 million in 2016 and $8-11 million in H2 2018) on marketing and advertising to gain new users and increase transaction volumes. According to a source, post-demonetisation, the company expanded its retail business rapidly and onboarded a significant number of retail merchants. However, this wasn’t enough – the number fell short of that achieved by Paytm. ‘Paytm outspent MobiKwik like crazy,’ said another source. The first source mentioned that in the ecommerce and wallets businesses, ‘you have to acquire both the user and the vendor.’ For all the marketing spend and onboarded merchants, the service was not gaining users.
Competition and UPI
‘The only way to get Indian users to use mobile wallets is by giving them cashbacks,’ a payments expert told MediaNama, ‘with UPI, the use case for mobile wallets had gone down, and so had their usage.’
Paytm has thrice the number of users – 320 million vs MobiKwik’s 107 million, and nearly double the number of merchants – 5 million vs MobiKwik’s 3 million, on its platform.
A payments expert and another source told us that ‘payments was never the money maker. The data that drove it was supposed to become a key asset in providing on-the-top services like lending and insurance.’
Churn, churn, churn
‘The writing was clear on the wall when there was no big fundraise last year,’ said one person familiar with the matter. Top leadership ‘knew nothing would happen,’ leading to a string of exits, they added. Vineet Singh (Chief Business Officer) and Akash Gupta, VP of Marketing quit the company in 2017. This was followed by Daman Soni (CMO), Vivek Sinha (Retail Head), Rukaiya Rangwala, the head of the payment gateway & online business, and Rohan Khara (Chief Product Officer) who all left this year. MobiKwik’s CRO, Puneet Agarwal, also left in 6 months after joining earlier this year, a development the company denied to MediaNama. Agarwal now works at WeCash.
The road ahead
Despite stressing that funding isn’t everything, MobiKwik’s co-founders have a tough battle to fight in the near future. The company runs the risk of shutting other verticals and running out of money, in a space which is not only crowded but also well funded: Amazon invested Rs 220 crore in its payments arm Amazon Pay, a month after it invested Rs 590 crore in it. In August, Paytm raised a reported $300-350 million from Berkshire Hathaway for a 3-4% stake. In the same month, Flipkart Payments infused Rs 451.66 crore into PhonePe.