Daraz to Layoff 11% Workforce Due to ‘Extremely Difficult’ Market Conditions

South Asia’s leading e-commerce marketplace Daraz has announced to reduce its workforce by 11 percent amid extremely difficult market conditions.

Chief Executive Officer Bjarke Mikkelsen informed Daraz employees about the layoffs earlier today.

“This decision has been made by myself and the leadership team to prepare the company for the current market reality and to ensure that Daraz will thrive in the long term to achieve our vision,” he said in a message to Daraz employees shared by the company.

The Daraz top executive briefly explained the future trajectory of the company and the reasons why the platform was parting ways with 11 percent of its workforce. He recalled, “For the last 5 years, we have been following our long-term business plan and increased our active shoppers from 3 million in 2018 to more than 15 million today, with average order growth of almost 100% until last year. We came out of COVID strong thanks to all the hard work and dedication of everyone in the team. I can’t thank you enough for this!

“However, in the last 12 months, the market environment turned and became extremely difficult with a war in Europe, huge supply chain disruptions, soaring inflation, increasing taxes, and removal of essential government subsidies in our markets. Despite these headwinds, we are still growing our business and we have made big progress on our unit economics in the last 12 months. Essentially, we are improving our services faster than that market can hold us back, and this makes me incredibly proud,” Mikkelsen stated.

The Daraz CEO pointed out the progress wasn’t enough and the company needed to do more to adjust to the lower growth outlook in the next couple of years. “In order to weather the storm, we need to collectively do everything we can to improve profitability and save costs. This includes refocusing on the core business, simplifying the organization, and doing more with less in all departments”.

Mikkelsen added, “we also have to continue to invest in our future, and in order to do that, we need to stop any investments that are not aligned with our strategy. We need to double down on product innovation across our platforms as well as our own internal productivity. We cannot make these investments if we don’t make some difficult decisions now”.

He further said, “In the past 8 years, we have touched tens of millions of lives across South Asia and we have lived our purpose of uplifting communities through the power of commerce. In the next decade, we will stay committed to our vision, purpose, and strategy, and I can assure you that we will get there. Our journey is long and we are very fortunate to have the support of Alibaba to navigate the short-term uncertainty. But for now, our top priority is to support everyone impacted by the organizational changes. During these challenging times, you have fought for our customers and sellers alongside your teammates. Your work matters and you will always be a part of Daraz’s story. We will be sure to treat everyone impacted with compassion and to lend as much support as we can”.

“I ask everyone who is staying to be supportive as we go through the transition this week. Next week we will re-group and focus on the tasks ahead. For the coming weeks and months, the leadership team and I will update you more frequently to start the year with the best possible setup,” he concluded.

Daraz Pakistan will continue to invest in product innovation

In a statement shared with ProPakistani, the company said that following the announcement by CEO Bjarke Mikkelsen, Daraz Pakistan Managing Director Ehsan Saya spoke to the employees in Daraz Pakistan explaining that Daraz is restructuring to ensure we continue to grow in the future.

Daraz Pakistan will continue to invest in product innovation across our platforms. Earlier in October, Daraz invested in the region’s first smart distribution centres in Karachi and Lahore as a testimony to build a sustainable future for e-commerce in Pakistan and will continue to look for opportunities and investments that are aligned with our strategy, the statement said.

“Naturally, given global economic conditions we are ensuring we invest in all the right priorities. We will continue investing in Pakistan and are strong believers of this market, hence, we felt it is imperative that we reorganise our structure to scale and grow in the coming years”, said Saya.

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