Nigerian-based B2B e-commerce platform Alerzo which digitizes commerce and payments between FMCG suppliers and informal retailers has cut off 15% of its full-time staff.
This is the second round of layoffs in seven months for the B2B startup according to reports from TechCrunch.
Alerzo, a first-party e-commerce company, had over 2,000 employees (half of whom worked full-time) across Nigeria until the initial layoffs in September, which hit 5% of its full-time personnel.
The first round of layoffs, according to Alerzo, was performance-related and entailed the digitization of some functions (including the development of an internal ERP).
Nevertheless, the startup’s second round of layoffs affected 15% of its full-time employees across multiple areas, leaving approximately 800 staff. We were unable to confirm how many part-time and temporary employees were laid off in both layoffs.
A second layoff isn’t out of the question for Alerzo, which serves over 100,000 merchants. According to a company representative, Alerzo broke even in Q3 2021, before the startup, which was only present in Ibadan and Lagos at the time, launched a large increase and over hired nationally, aided by its $10 million+ Series A financing round.
As a result of the growth, the company’s e-commerce operation rose 2.3x (in dollar terms) in 2022 compared to 2021. And so did its payments division, which the company entered through an acquisition in Q4 2021 and has so far produced a 200 billion run rate.
Yet, the company, like many others, is feeling the pressure of the larger economy after seeing strong expansion in 2020-21 and wants to reform and reduce payroll in order to enhance profitability.
Alerzo also believes that with the payment licenses it has secured, which will greatly contribute to the digitization of its merchant base, it may accelerate its journey to breakeven and profitability by the third quarter of this year.
According to the startup, given historical market circumstances, we employed very aggressively during the past couple of years to power swift growth and expansion across the country.
This does not correspond with the current economic environment, thus we were forced to make modifications to our business to be more focused on seeking excellent unit economics.
Notwithstanding these obstacles, we remain committed to our goal and are sure that this restructuring will allow us to better serve our clients while still pursuing long-term growth. We appreciate all of these employees’ hard work and dedication.
Alerzo stated it will pay out all contractual notice periods, grant an additional one-month compensation, maintain HMO coverage (including for covered family members) until the end of 2023, as well as provide job placement and counseling services to employees who have seen their roles become obsolete.
However, Alerzo is among a few African firms that have gone through two waves of layoffs in the last year, including mobility startup SWVL, fintech Chipper Cash, and e-commerce startup Sendy.
In addition, in what has been described as a tough few months for African e-commerce companies, Jumia, as part of its restructuring efforts in Q4 last year, terminated 900 employees across its 11 regions, affecting 20% of its workforce.
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