Yepme delays salaries, lays off staff. Is it going the AskMe way?

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Is the online fashion retailer Yepme heading towards an AskMe-like fiasco?

Last month, the Gurgaon-based Yepme quietly shutdown two of its units – warehousing and quality control – letting go of close to 30 employees. But founder Vivek Gaur insists that the move was towards the company’s growth, and not “because we have no cash.” (Hat tip to TechCircle, which reported about the layoffs first.)

Apart from names that rhyme, Yepme and Askme seem to have a similar trajectory towards disaster.

Yepme had to trim its workforce after it started outsourcing warehousing and quality audits to third-party vendors in India and the US. “That rendered the teams unviable,” Vivek told Tech in Asia.

And yet, according to the five employees we spoke to, Yepme has not formally laid off the team members. “They were told by team leaders verbally. They have been asking for a termination letter, but that hasn’t happened,” one of the existing employees of Yepme said.

This is a situation starkly similar to the events that unfolded at AskMe. Its top management kept a lid on the business falling apart, for close to a year. It was never formally announced, but the company was disintegrating team by team. The management went incommunicado, leaving scores of employees without a job and months of salary.

Yepme employees say the company management is not responding to their requests of officially terminating their jobs. It is a scene straight out of AskMe’s drama. The online listings company, which is under investigation now for misappropriation of funds, suspended operations in August 2016, but employees are still officially on their payroll.

Why would a company do that? If a company terminates employees, they are obligated to pay a bulk sum of money as severance packages, as per employment contracts.

Moreover, at least five of the company’s employees we spoke to allege that Yepme management repeatedly delayed salaries, since October. The Yepme founder did not deny it, but said that salaries are delayed only for the month of January.

“Nov-Dec salaries were duly deposited. January salaries were delayed partly because of the full-and-final settlement for outgoing employees, and due to impact of demonetization,” Vivek said.

Interestingly, Yepme’s disproportionate expenses compared to turnover is something AskMe also struggled with. Expenses ate up the company’s resources and cash flow, eventually leading to a shutdown.

Yepme’s losses have been steadily mounting, despite the fact that Yepme earns higher margins of 40-60 percent selling private labels. Online marketplaces such as Flipkart and Amazon earn margins of about 30-40 percent.

Damage control