Alerzo, a Nigerian B2B e-commerce platform that digitizes commerce and payments processes between FMCG suppliers and informal retailers, has laid off 15% of its full-time workforce, the company confirmed to TechCrunch.
This is the company’s second round of layoffs in seven months. As a first-party e-commerce business, Alerzo had a headcount of more than 2,000 employees (half of whom worked full-time) across Nigeria before the first layoffs last September, which affected 5% of its full-time workforce. According to Alerzo, the first round 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, executed due to a profitability push, impacted 15% of its full-time employees across various departments, leaving about 800 employees at the startup. We couldn’t confirm how many part-time and temporary hires were let go in both layoffs.
For Alerzo, which serves over 100,000 retailers, the basis for a second layoff isn’t outlandish. According to the company’s spokesperson, Alerzo was breakeven in Q3 2021, before the company, present in just Ibadan and Lagos at the time, undertook major expansion and over-hired nationwide, buoyed by its $10 million+ Series A financing round.
The company’s e-commerce business grew 2.3x (in dollar terms) in 2022 compared to 2021 due to the expansion. And so did its payments arm, which the company delved into via an acquisition in Q4 2021; so far, it has recorded a ₦200 billion run rate. However, the company, feeling the impact of the broader economy after enjoying rapid growth in 2020-21, like many others, wants to restructure and cut back payroll in order to boost profits. Alerzo also thinks that with the payment licenses it has received, which will significantly contribute to the digitization of its merchant base, it can speed up its path to breakeven more quickly and reach profitability by Q3 this year:
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 around pursuing strong unit economics. 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 of these employees.
For employees who have seen their roles become redundant, Alerzo said it will pay out all contractual notice periods, provide an additional one-month severance, continue HMO coverage (including for covered family members) until the end of 2023 and provide job placement and counseling services.
Meanwhile, Alerzo is one of a handful of African startups to have conducted two rounds of layoffs over the past year, including mobility startup SWVL, fintech Chipper Cash and e-commerce startup Sendy. Also, in what can be described as a trying couple of months for African e-commerce outfits, Jumia, as part of its streamlining efforts in Q4 last year, terminated 900 positions across its 11 markets, affecting 20% of its staff.