Regional e-commerce firm Lazada began the new year with undisclosed staff cuts. Junior and senior staff received calendar invites for meetings with its HR department at the conclusion of their workday on January 3rd.
Lazada did not disclose how many employees were affected or whether severance packages had been offered to those leaving, which began operations in 2012. Lazada has operations across six countries as a subsidiary of Alibaba Group Holding.
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Lazada was established by Rocket Internet and became the first online marketplace in Southeast Asia when it debuted across Indonesia, Malaysia, Philippines, Singapore and Thailand in 2012. While Amazon or Tmall required significant initial investments and time to become established shopping platforms in China and Southeast Asia respectively, Lazada quickly established itself as an attractive shopping experience within a matter of years – earning itself its spot as the region’s go-to shopping platform.
In 2022, Alibaba acquired a controlling stake in an existing Southeast Asian firm and installed their own management team to oversee it – hoping to quickly establish itself in this fast-growing market and leverage an established group of consumers.
Cultural conflicts and boardroom battles at Lazada as well as its bloated management team led by Ant Financial CEO Lucy Peng are said to have hindered progress. Additionally, their slow response to the coronavirus pandemic which forced brick-and-mortar shops and markets to close gave an edge to rivals such as Shopee.
The layoffs come as Lazada focuses on China.
Before it was acquired by Alibaba in 2016, Lazada was Southeast Asia’s fastest-growing ecommerce platform. Through its collaborative business model, vendors could sell goods through Lazada much like Amazon; an added benefit was that prices on many items sold on Lazada were often cheaper than what could be found locally.
Unyear into its deal, however, Lazada saw its growth diminish as Chinese company focused on its ecommerce platforms in China, which offered greater prospects of expansion. Meanwhile, local competitors like Shopee had begun mounting offensive efforts.
Lazada will switch its European strategy in order to improve its prospects in Europe by shifting focus away from Chinese imports and toward European vendors instead, according to two sources familiar with the matter. This strategy will enable Lazada to leverage existing logistics infrastructure while taking advantage of Alibaba?s expertise in turning sellers into Super eBusinesses.
The layoffs affect staff in Singapore.
Layoffs in the tech industry are nothing new; this round is notable, however, in that it involves both senior and junior staff according to people familiar with the matter.
People affected could receive their termination letters as early as this week, and those whose positions have been cut should expect severance packages.
Tech in Asia understands that Lazada is restructuring their team in Singapore, Malaysia and other markets, impacting staff from multiple departments. Affected employees were informed to expect a meeting with their managers today (Jan 3).
Layoff victims could face an uphill fundraising battle when looking for new employment, particularly those at tech companies with hiring freezes in place such as Meta. Meta has recently laid off staff in order to deal with increasing competition, privacy rules and economic challenges, while one start-up’s recruitment head indicated that recruiters tend to feel the effects of layoffs more acutely as they find themselves without work.
The layoffs affect staff in Indonesia.
The move follows several other layoffs by Indonesian e-commerce and tech startups, most prominently computerized teaching startup Ruangguru’s announcement to terminate hundreds of employees due to changes in global market conditions.
Goto, which specializes in full-stack payment API solutions for businesses, plans to reduce staff by around 200 in order to streamline operations, boost profitability and restructure its business.
PT Oriente is an Indonesian financial technology firm which has in the past year laid off several dozen staff. KSPI (Confederation of Indonesian Workers’ Unions) has advised employers to avoid layoffs during pandemic outbreaks by employing alternate shift systems and offering severance packages while helping affected employees find new work opportunities.