Alerzo, a Nigerian B2B e-commerce platform that digitizes trade and payment processes between FMCG suppliers and informal retailers, has laid off 15% of its full-time workforce, the company confirmed to businessupdates.org.
It is the company’s second round of layoffs in seven months. As a first-party e-commerce company, Alerzo had a workforce of over 2,000 employees (half of them working full-time) across Nigeria before the first layoffs last September, which affected 5% of the full-time workforce. According to Alerzo, the first rounds of layoffs were performance-related and involved the digitization of some roles (including the development of an internal ERP). Meanwhile, the second round of cuts, implemented due to a rise in profitability, affected 15% of full-time employees in various departments, leaving about 800 employees at startup. We could not confirm how many part-time and contingent employees were laid off in both layoffs.
For Alerzo, which serves more than 100,000 retailers, the basis for a second layoff is not bizarre. According to the company spokesperson, Alerzo broke even in the third quarter of 2021, before the company, present only in Ibadan and Lagos at the time, undertook a major expansion and relocation nationwide, buoyed by its $10 million+ Series A Funding Round.
The company’s e-commerce business grew 2.3x (in dollars) in 2022 compared to 2021 due to the expansion. And so was its payments department, which the company dug into through an acquisition in Q4 2021; so far it has registered a run rate of ₦200 billion. However, the company is feeling the impact of the wider economy after rapid growth in 2020-21, like many others, and is looking to restructure and reduce payroll to boost profits. Alerzo also believes that with the payment licenses received, which will significantly contribute to the digitization of its trading base, it can accelerate its path to break-even and be profitable by the third quarter of this year.
Given the past market dynamics, we’ve been hiring very aggressively in recent years to drive rapid growth and expansion across the country. This does not match today’s economic environment, so unfortunately we had to make changes to our business to focus more on pursuing strong business economies. Despite these challenges, we remain committed to our mission and are confident that this restructuring will enable us to better serve our customers and pursue sustainable growth. We are grateful for the hard work and dedication of all these employees.
For employees who have seen their position become redundant, Alerzo said it will pay all contractual notice periods, provide additional one-month severance pay, continue HMO coverage (including for covered family members) through the end of 2023, and provide job placement and advisory services.
Meanwhile, Alerzo is one of the few African startups to have had two rounds of layoffs in the past year, including mobility startup SWVL, fintech Chipper Cash and e-commerce startup Sendy. Also, in what could be described as a difficult few months for African e-commerce outfits, as part of its streamlining efforts in the fourth quarter of last year, Jumia closed 900 positions in its 11 markets, cutting 20% of its workforce. affected.