KARACHI: E-commerce giant Daraz Group has announced it is slashing 11 percent of its workforce across the group, with the CEO saying the decision was taken due to the “reality” of the market after the Russian invasion of Ukraine in 2022 and subsequent rise in inflation across the globe.
Daraz Group operates in Pakistan, Bangladesh, Sri Lanka and Nepal, and was acquired by China’s AliBaba in 2018 from European tech incubator Rocket Internet. The company has since increased its number of active shoppers from three to 15 million, with an average order growth of almost 100 percent until last year, Daraz Group Bjarke Mikkelsen said in a statement.
“I’m making the tough announcement that we are reducing our team by 11 percent and saying goodbye to many talented people in the process,” Mikkelsen said on Monday. “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.”
According to the platform’s LinkedIn profile, Daraz has access to over 500 million customers in its markets and employs over 10,000 people. The recent decision to slash 11 percent of its workforce is likely to impact an estimated 1,100 people, who will be laid of within a week.
Mikkelsen said the company’s growth pace decelerated last year after Russia’s invasion of Ukraine caused a rise in the prices of global commodities, which disrupted supply chains and economies in many parts of the world.
“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.”
The CEO said despite economic headwinds, Daraz remained a growing business and had taken huge strides in unit economics over the past couple of years.
“Unfortunately, it’s not enough and we need to do more to adjust the company to the lower growth outlook in the next couple of years,” Mikkelsen said. “In order to weather the storm, we need to collectively do everything we can to improve profitability and save costs.”
Following the announcement, Daraz Managing Director Ehsan Saya spoke to Pakistani employees of the company to explain that the group was restructuring to ensure its continued growth.
“Naturally, given the global economic conditions, we are ensuring we invest in all the right priorities,” Saya was quoted as saying by Daraz Pakistan.
“We will continue investing in Pakistan and are strong believers of this market, hence, we felt it is imperative that we reorganize our structure to scale and grow in the coming years.”
Earlier in October, Daraz invested in the region’s first smart distribution centers in Karachi and Lahore to build a sustainable future for e-commerce in Pakistan.