At a time when India’s e-commerce segment is attracting large dollops of foreign capital, five-year-old Yebhi.com seems to have run into rough weather.

Yebhi, an online retailer, has been scaling down its employee count, amid speculation that it has been unable to pay suppliers and vendors for the last seven-eight months. The company runs the risk of being shut down if it does not arrest the slowdown, say sources.

Will the company shut shop or tweak its business model to make a comeback? In response to a Business Line query, Manmohan Agarwal, Managing Director and Founder of Bigshoebazaar, which runs Yebhi, says: “It would be appropriate for me to comment on either of these in another 12 days.”

When contacted Yebhi's ex-founder Rahul Jain said that Yebhi is restructuring its business and might make a comeback.

Inconsistency Sources attribute the company’s failure to its inability to raise fresh capital in the face of increasing competition and its constant tinkering with the business model. The company started as an online footwear store in 2009, but changed its model in 2011 to sell fashion and apparels and then became a marketplace after its competitors such as Flipkart, Myntra and Snapdeal changed their respective models.

“There were 300 employees in March and now it is less than 100. Everything looks uncertain and there have been issues over late payments to sellers and even employees. Several sellers have de-listed themselves from the site. We have not got any fresh inventory in the last few months,” says an employee requesting anonymity.

Fund crunch Yebhi.com ran into trouble early this year after being unable to scale up and raise funds. According to CrunchBase data, the firm has raised $40 million (around ₹240 crore) since its inception from investors such as Nexus Venture Partners, Fidelity Growth Partners, Qualcomm and Narayana Murthy's Catamaran Venture. In contrast, companies such as Flipkart, Myntra, Jabong, Fashionandyou and Snapdeal have been able to attract new investors every year.

More problems cropped up after co-founders Nikhil Agarwal and Rahul Jain quit over differences with Manmohan Agarwal in January this year. Soon after, the company witnessed several high profile exits, including Chief Business Officer Nikhil Rungta, who had joined the start-up from Google India.

Besides, its tie-up with railway ticketing portal IRCTC to sell fashion failed as consumers went to IRCTC for booking tickets and not with the intention to shop.

Strong competition Industry experts say if Yebhi fails, it could trigger a major consolidation in the country’s booming $3.5-billion e-tailing industry. “I believe companies at times put innovation on the backburner and fall behind their more innovative competitors. This is what happened at Yebhi,” says Ashish Jhalani, founder of consultancy firm E-tailing India.

David Abikzir, Chairman of another consulting firm Nymex Consulting, says Yebhi didn’t take into account the repercussions of Amazon’s arrival in India on the market and was unable to ramp up its offerings at the same speed and level as its competitors did.

Arvind Singhal, Chairman at Technopak Advisory, says Yebhi tried to change its model too many times, thereby confusing the consumers.

That apart, e-tailing at the moment is a high capex consuming business, where most of the investment goes to acquire new customers through high decibel marketing campaigns.

He adds Yebhi.com has not advertised in the last 10-12 months.

According to Worthofweb, a website providing valuation and other statistics for online companies, Yebhi is valued at ₹130 crore. Alexa.com, which provides ranking for ecommerce companies globally, says Yebhi’s ranking (in daily traffic) slipped to below 5,000 in August from 2000 in June 2014.

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