MUMBAI | BENGALURU: Ecommerce major Snapdeal is rationalizing its offices and is moving into co-working hubs instead of operating from leased offices in an effort to trim costs. The company has vacated its office with 200-seat capacity in Mumbai’s Malad suburb and picked up a 90-seat office in a co-working hub in Andheri, said three persons familiar with the development. The company has picked up an entire floor in co-working space provider Awfis Space Solution’s hub in Andheri (west) that has a total capacity of 255 seats.
The move is expected to help the Softbank-backed company ease its cost incurred for this specific centre by 10%. “Apart from reduction in cost burden, flexibility to expand and cut space requirement as per business demand has led to the decision to move into a co-working space. Conventional office lease may not support that kind of flexibility,” said one of the persons mentioned above.
Last year, Snapdeal consolidated several offices in the National Capital Region into one central office of 4.5 lakh sq ft in Gurgaon’s Udyog Vihar. According to Snapdeal, the move to shift its Mumbai office to a co-working hub is not aimed at cost reduction.
“Snapdeal has, in fact, expanded its team at Mumbai by inducting more team members in the fashion team. We have shifted our Mumbai office to make commuting easier for our Mumbai team. The new office location at Andheri is centrally located within Mumbai and provides better public transport connectivity to our team, including access to Mumbai metro,” Snapdeal said an email response.
The new office is also a better managed facility, with extra amenities not available at its previous office location. There are no plans to move into co-working spaces, the response added.
An email query to Awfis Space Solutions remained unanswered until the time of going to press.
The consolidation among ecommerce players in India has seen companies scrimping on large office space in cities practically halving their commercial real estate transactions. According to real estate consultancy CBRE, the share of the ecommerce sector in office transactions has fallen by almost half to 5% in the first half of 2016 as against 9% in the same period a year ago.
According to property consultants, the consolidation of commercial spaces picked up by ecommerce companies will take place at a faster pace than the rate at which they were lapping up offices some time ago. Rationalization seems inevitable as several of these companies are scouting for partnerships to achieve growth.
Most startups are now incorporating corporate real estate strategies such as consolidation, expansion and focus on peripheral locations with an expectation of saving as much as 25% operational costs through such rationalization.
For space and cost efficiency, several ecommerce startups are either consolidating or are shedding office space they might have leased in the industry’s growth phase.
Co-working spaces as a concept is gaining traction as a practical option for start-ups in India to save cost and gain flexibility on utilization of offices. The trend is catching up in key cities led by Bengaluru that has become the primary hub for such startup ventures. When compared with conventional office leases, co-working spaces offer cost saving of as much as over 70% in a city like Bengaluru.
Credits ET Realty