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.