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Simpl doubles down on Pay Later service to improve operational efficiency

In a company-wide mail, founder Nitya Sharma laid out a new strategic blueprint for Simpl, which centres on improving unit economics, expanding its network, and reducing operational costs.

Simpl doubles down on Pay Later service to improve operational efficiency

Wednesday May 22, 2024 , 3 min Read

Days after cutting 100 jobs, fintech startup Simpl has outlined a new strategy, with a special focus on its Pay Later product.

The buy-now-pay-later startup offers interest-free Pay Later services, pay-in-3 instalment options, utility bill payments, and a one-click checkout network with over 26,000 brands.

"Pay Later will be the bedrock of our strategy going forward. We will be focused on one product and we will make it insanely great," CEO and Co-founder Nitya Sharma said in an email addressing employees.

The Bengaluru-based company will also enforce a hiring freeze and look for other ways to cut costs. As per LinkedIn, the company has more than 600 employees.

The Pay Later service lets users make purchases from Rs 1,500 to 20,000 with a 15-day billing cycle and no interest if paid on time.

In the mail, which was seen by YourStory, Sharma said Simpl will double down on the Pay Later service as the company looks to improve unit economics, expand its network, and reduce operational costs.

To enhance unit economics, Simpl plans to adjust spending limits for different consumer cohorts to better manage risk. To expand margins, it will focus on increasing availability and consumption in high-margin categories such as fashion, beauty and personal care (BPC), and direct-to-consumer (D2C) brands.

Queries sent to Simpl went unanswered at the time of publishing this report.

The fintech company has been struggling with cash burn while its new user acquisitions have plateaued, according to an earlier Moneycontrol report.

To address slow customer acquisitions, Simpl plans to ensure uniform consumer onboarding and education across all channels, prioritising the first 30-day consumer experiences, and working with merchants to achieve joint goals of retention, average order value (AOV) increase, and positive consumer behaviour.

"As we achieve these goals; we will be a company that will be positioned to grow fast and grow efficiently at a very low operational cost. This will be our new high ground that we should achieve in the next 60 days," the email said.

Simpl, founded in 2015 by Sharma and Chaitra Chidanand, experienced rapid growth in FY22, recording a significant 17-fold increase in revenue to Rs 31.63 crore compared to Rs 1.81 crore in FY21, according to an earlier report by Entrackr. However, according to its annual financial statement filed with the Registrar of Companies (RoC), the company's losses also surged 22.5 times, rising to Rs 144.28 crore in FY22 from Rs 6.39 crore in FY21.

In 2021, the company said it raised $40 million in a Series B round of funding led by Valar Ventures and IA Ventures.

Over the past year and a half, the Reserve Bank of India (RBI) has implemented measures to moderate credit expansion, particularly in unsecured consumer loans. These regulations target banks and non-banking financial companies (NBFCs) by imposing higher capital adequacy norms.

Additionally, the RBI has moved to restrict non-bank lending activities conducted through prepaid payment instruments (PPIs) such as prepaid cards and digital wallets. These measures have pushed BNPL players to reassess and adjust their business models.

In December last year, Simpl's BNPL competitor, ZestMoney, shut down its operations and laid off its remaining 150 employees.

(The copy was updated with information on the company's employee count and a new image.)

Edited by Affirunisa Kankudti