New Delhi: ShopClues’ slide from a celebrated unicorn to a steeply discounted buyout stands out as a stark case of value erosion in India’s startup ecosystem.

Valued at $1.1 billion in 2016 and preparing for a potential public listing, the Gurugram-based e-commerce firm saw its fortunes unravel before its acquisition by Singapore-based Qoo10 in 2019 for roughly $70–$100 million in an all-stock deal. The transaction wiped out over 90 per cent of its valuation.

From rapid rise to competitive squeeze

Founded as an “online Chandni Chowk,” ShopClues built early momentum by targeting price-sensitive consumers in Tier-II and Tier-III cities with unbranded, low-cost goods. The approach helped it scale at a time when Amazon and Flipkart were largely focused on metro markets.

That edge narrowed as both rivals expanded into smaller towns, backed by stronger logistics, deeper discounting and higher customer trust. As competition intensified, ShopClues began losing its core differentiator.

Its marketplace model, reliant on unorganised sellers, ran into quality control issues. The platform developed a reputation for counterfeit and low-quality products, leading to high return rates — estimated at 30–40 per cent — and weakening consumer confidence as competitors invested in reliability and service.

Leadership churn and funding strain

Internal challenges compounded the pressure. Co-founder Sandeep Aggarwal had stepped down earlier following insider trading charges in the US, leaving Radhika Aggarwal and Sanjay Sethi to lead the company. A subsequent public fallout between the founders further dented investor confidence.

Financial stress escalated into what was described as a “death spiral.” In an attempt to show a path to profitability ahead of a potential IPO, ShopClues cut marketing spends, triggering a sharp fall in gross merchandise value. Efforts to raise fresh funding did not succeed, with existing investors unwilling to commit additional capital.

The company explored strategic pivots, including an enterprise-focused vertical and expansion of its reseller platform, but these did not reverse the decline. Reports of an Enforcement Directorate probe into certain fund flows added to the uncertainty.

Developments linked to founders

After stepping down as chief executive in 2015, Sandeep Aggarwal went on to found Droom, an online marketplace for buying and selling used automobiles. The platform is currently facing a GST investigation by authorities in Pune, Jaipur and Haryana.

The company said, “Droom will fully comply with all applicable laws and regulatory disclosure requirements.”