BeepKart undertook three rounds of layoffs in the past five months and fired around 60-70 employees in the latest such exercise last month
As part of the cost-cutting exercise, the startup shut six out of its 11 stores across Bengaluru and Chennai over the last five months
BeepKart, backed by the likes of Vertex Ventures, Stellaris Venture Partners, among others, operates a full-stack platform that allows users to buy and sell used two-wheelers online
Bengaluru-based used two-wheeler marketplace BeepKart fired around 130 employees in three rounds of layoffs in the last five months as part of a cost-cutting exercise amid a funding crunch, sources told Inc42.
The most recent restructuring exercise was undertaken in the last week of September, in which the startup let go of around 60-70 employees from its Bengaluru and Chennai offices and stores, the sources said.
Overall, BeepKart laid off around 40% of its employees in the last five months.
The latest restructuring exercise was undertaken in a similar manner to the previous two, with the founders addressing the employees in a town hall meeting. Following the meeting, the respective managers of the employees informed them that they were being laid off, multiple sources said.
“We were told the company was struggling to scale and didn’t have much cash to bear the cost, hence it was decided to undertake another round of layoffs,” one of the sources said.
The impacted employees were offered severance pay based on their notice periods.
As part of this cost-cutting exercise, the startup also shut six out of its 11 stores across Bengaluru and Chennai over the last five months, as per the sources.
A questionnaire sent to BeepKart founders Hemir Doshi and Abhishek Saraf on the developments didn’t elicit any response till the time of publication of this story.
Expansion Gone Wrong
Founded in 2021 by Doshi and Saraf, BeepKart operates a full-stack platform that allows users to buy and sell used two-wheelers online. The startup has raised a total funding of around $18 Mn till date and counts marquee investors like Vertex Ventures, Stellaris Venture Partners, Chiratae Ventures, and Innoven Capital among its backers. Currently, it offers its services in Bengaluru and Chennai.
According to the sources, strong competition and rising expenses forced the startup to reduce its headcount.
“Near the end of last year, BeepKart decided to expand its operations by opening new stores and hiring aggressively,” one of the sources said, adding that the startup was eyeing a rapid growth in its top line and looking to turn EBITDA positive.
As part of these plans, it opened new stores in Jayanagar, Rajajinagar, KR Puram in Bengaluru and Ashok Nagar and Poonamallee in Chennai. However, these stores failed to add to the startup’s top line and led to a surge in its costs.
“The stores in Jayanagar and Kormangla were in the radius of just 4 kilometres. These stores cut each other’s market share, rather than adding new customers. The same happened with Poonamallee and Porur in Chennai,” one of the sources said.
Following this, the startup changed its refurbishment policies in a bid to cut costs. This resulted in poor vehicle quality and customer complaints, the sources said.
Inc42 also saw several social media posts with customers complaining about BeepKart.
Meanwhile, BeepKart’s move to expand its margins by increasing prices also backfired as customers flocked to the startup’s competitors in the crowded space.
“Let’s say BeepKart is buying a bike at INR 60,000 from a customer and then trying to sell it at INR 1,00,000. When there are so many competitors in the space, why would a customer buy a used bike with so much of a premium when he/she can get it at INR 70,000 to INR 80,000 from competitors,” a source said.
BeepKart competes against the likes of TVS-backed DriveX, Yamaha-backed CredR, and BikeDekho, among others.
The startup incurred a net loss of INR 28 Cr on an operating revenue of INR 22 Cr in FY23. While it is yet to file its financial statement for FY24, one of the sources said that it is likely to post a revenue of INR 100 Cr for the year.
