eCommerce giant Daraz has decided to lay off “many valued members of the Daraz family” as the company’s cost structure continued to fall short of its financial targets.
The official statement by Acting CEO James Dong read, “This decision was taken as a last resort. Over the past couple of years, we have worked to manage costs and improve operational efficiency substantially. Despite our efforts to explore different solutions, our cost structure continues to fall short of our financial targets. Facing unprecedented challenges in the market, we must take swift action to ensure our company’s long-term sustainability and continued growth”.
“To those who will be departing – your dedication and expertise have been instrumental in shaping Daraz into what it is today. Daraz could not have done it without you. Together, we have made a lasting impact on millions of consumers and hundreds of thousands of sellers through digitalization. We will do all we can to support you through a severance scheme, career support and overall wellness.
For those who will continue their journey at Daraz, we genuinely appreciate your understanding and resilience. We believe we can help Daraz navigate this challenging period together,” the statement added.
Dong said Daraz’s focus was now on proactively improving the consumer experience by diversifying its offerings of value-for-money products and expanding its product categories. “In tandem, we will work to enhance the operational efficiency of sellers on our platform. We will also strive to cultivate an efficient, nimble and resilient organization, instilled with fighting spirit and the capability to achieve victories essential for maintaining our market leadership in all five markets,” he said.
“We remain passionate and ambitious about South Asia, and are committed to maintaining our regional presence in order to continue contributing to its digital transformation. Our overarching goal is to enable businesses and consumers across South Asia to reap the benefits of e-commerce,” he added.
The acting CEO expressed confidence in the remaining team’s ability to continue to uplift communities through the transformative power of commerce. “With our collective strength and commitment, we stand poised to shape a future where the impact of digital commerce will be more remarkable,” he concluded.
Experts claim that a common practice among all global e-commerce platforms is excessive hiring during peak sale seasons, especially the last quarter of a year. These excess employees are then let go when demand fades in the first quarter each year. In Daraz’s case, its 11/11 and 12/12 sales, followed by the New Year’s sale make up the peak season.
It is worth mentioning that last year Daraz reduced its workforce by 11 percent and blamed it on difficult market conditions.
Bjarke Mikkelsen, who was the CEO at the time, tried to support the firing spree with a statement that the market environment had turned and became extremely difficult due to issues like the Russia-Ukraine war, supply chain disruptions, soaring inflation, increasing taxes, and removal of essential government subsidies in markets like Pakistan.
Daraz sellers usually sell higher than market price. Daraz also add up COD charges now which were previously free. The sales on 11.11 and similar are just Blown up ad campaigns with nothing actually at sale. Sellers inflate the prices before the event and then slash it down to more than market price and call it a sale.
These practices have lead to consumers in Pakistan switching back to the brick and mortar stores. Ecommerce is just a fraud in Pakistan.
daraz is really good to buy things not easily available in local market
I worked in this company 2 years back. I was on a higher management role so I knew things that usually do not see the light of the day. Daraz is a very great place to work and strive and one can really learn many new things. But unfortunately this company is marred by unethical executive management personnel who cannot take a simple decision and everyone finds a fall guy to make a decision on their behalf. In my time, I know one of many cases that happened which is a supreme example of lack of management and accountibility. Daraz invested 30 million pkr in a project called non-mart facility which would be responsible for all non FMCG goods. The executive management took such wrong decisions due to their lack of experience that Daraz lost its inventory worth 40 million pkr while transitioning to the new facility. The executive management was told before hand that their decision would be a disaster but they never litsened. In the end when the disaster did happened, they started blaming everyone else. This is unfortunate reality that happens in Daraz on daily basis, where decision makers themselves are not capable enough to make the right ones.