At least 400 employees at Alerzo, Nigeria’s most popular B2B e-commerce platform, have been laid off, which is about 15% of the company’s total staff. Reductions in the workforce occurred during the first week of March 2023.
Yet, staff members who wished to remain anonymous grumbled about the company’s hostile culture, lack of structure, and lack of work-life balance. Another anonymous source claims that on March 1, at about 6 p.m., impacted workers received termination emails and were immediately locked out of all company-issued software. Other workers started getting termination emails on Saturday.
The anonymous sources also acknowledged that this wave of layoffs was more extensive than the previous one in 2022, which largely impacted warehouse workers, with the company’s head of communications apparently among those cut-off. The firm said the layoffs were necessary owing to severe setbacks due to macroeconomic circumstances, post-election uncertainty, and the need to strengthen its unit economics.
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Also, sources also revealed that severance packages would include one month’s compensation for departing workers. In addition to helping them find new employment, the firm assured them that their HMO coverage would be maintained until the end of the year. According to our two reliable sources, the severance payment was widely seen to be disappointing. “most workers will get two months to pay as part of their severance package, but this was not conveyed to them due to various reasons,” Alerzo said.
Moreover, the firm said that, although it was expecting a downturn in business owing to the elections, cash shortages were a double whammy that may have impacted business. According to Alerzo, “many suppliers and customers are experiencing the distress of the cashless scenario and the election slow down, so we had to set the firm on a route to profitability. We’d want to be in a position where we have tighter control over unit economics, and we think we have the resources to get there.
After the layoff raid in early September 2022, this is the second wave of layoffs in the span of seven months for the firm. First-party e-commerce company Alerzo had over 2,000 workers (half of whom were full-time) in Nigeria before the first round of layoffs in September of last year.
Reasons for Alerzo’s layoffs
Alerzo claims that the first wave of layoffs was caused by poor performance and the automation of some tasks (including the development of an internal ERP). However, the company’s second wave of layoffs, carried out in response to a drive to increase profitability, affected 15% of full-time workers across a wide range of divisions, reducing headcount to about 800. However, the precise number of casual and temporary employees who lost their jobs is yet uncertain.
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For Alerzo, which serves over 100,000 retailers, the basis for a second layoff isn’t outlandish. A representative for the firm claims that Alerzo ran into significant difficulties in the third quarter of 2021, long before the company raised over $10 million in Series A funding and entered the marketplaces of Ibadan and Lagos concurrently.
Alerzo, like other African businesses, including mobility firm SWVL, a financial technology startup Chipper Cash, and e-commerce startup Sendy, has laid off employees twice in the last year. In addition, as part of its restructuring efforts in Q4 of last year, Jumia let off 900 employees across its 11 regions, or 20% of its total workforce, in what can be regarded as a tough couple of months for African e-commerce businesses.