Alerzo, a Nigeria-based B2B e-commerce startup has laid off 15% of its workforce. This is coming seven months after the company downsized its team of 2000 by 5% due to performance-related issues and digitisation of some responsibilities.
However, this latest layoff is aimed at what it describes as a profitability push. "The management team underestimated the challenges facing Nigeria and the global technology market," Adewale Opaleye, founder and CEO at Alerzo, told Semafor Africa.
The affected employees will be paid one month's salary as part of their severance package, their HMOs will also remain active until the end of 2023. The company also intends to assist them with job placement. Some employees—who are reportedly owed by the company—have complained that the package is "unimpressive".
About 14 of its warehouse across the country, including Abuja and Kano, have been shut down as part of the push. Opaleye says this will enable the company to navigate the Nigerian economy amidst the "uncertainty around the post-election landscape".
Opaleye launched Alerzo in 2018 as a last-mile distribution platform that helps retailers stock inventory directly from manufacturers—helping street-side vendors and shops in Nigeria’s cities access household supplies quicker and efficiently.
In August 2021, the e-commerce startup raised a $10.5 million Series A round led by London-based Nosara Capital. FJ Labs and several family offices from the U.S., Europe and Asia, including Michael Novogratz’s, participated in the round. This funding made the company overhire employees and embark on major expansions across the country.
"Given previous market dynamics, we hired very aggressively during the past couple of years to fuel quick growth and expansion across the country. This does not align now with the economic environment today, so we, unfortunately, had to make changes to our business to be more focused on pursuing strong unit economics," the company said in a statement cited by Tech Crunch.
These expansions 2.3x the growth of the company in 2022. Alerzopay, its payment arm which was established following the acquisition of Shago Payments, a Nigerian fintech company, also experienced similar growth within the same period. "We have gotten a banking licence and a PSS licence and we are in the process of launching three different products," an Alerzo spokesperson said.
This will enable the company's profitability strategy.
Another Nigerian e-commerce company, Jumia laid off 20% of its workforce for the same reason, the company's co-founders and co-CEOs also stepped down the former Executive Vice President for Africa. According to the company's supervisory board, the leadership changes intend to support Jumia's journey towards profitability.
Jumia also suspended Jumia Prime, a subscription-based delivery service providing customers with free shipping on its marketplace.
- This is a developing story, it will be updated with more details.