SoftBank-backed ecommerce firing 15% of workforce, cites ‘harsh circumstances’
Bengaluru, NFAPost: Meesho is laying off 251 employees, or 15 per cent of its workforce, marking another round of job cuts at the ecommerce firm as it seeks profit and reduces costs, Business Standard reported.
The Bengaluru-based firm informed employees about the layoffs in a town hall on Friday morning. Meesho Cofounder and Chief Executive Officer Vidit Aatrey admitted “judgement errors in over-hiring” in a May 5 letter to his employees.
“We grew by 10X from 2020 to 2022, helped by Covid tailwinds and aggressive investments. Even as we tracked our plans, the macro climate undeniably and considerably changed. As a result, we have to accelerate our timeline profitability as part of While our cash reserves buffer us well for these harsh circumstances, we need to stay highly prudent on the cost front,” said Aatrey in the letter.
“As leaders, we made judgement errors in over-hiring ahead of the curve. At the same time, we could have run our organisation structure in a more effective and lean manner overall. Our spans and layers were inflated, and this could have unintended consequences on our speed to execute,” said Meesho Cofounder and Chief Executive Officer Vidit Aatrey.
In April 2022, Meesho downsized its grocery vertical and laid off about 150 employees. According to the media reports, the actual number of employees impacted at that time was about 400.
Meesho has raised $1.1 billion in funding from investors such as SoftBank, Prosus, and Facebook at a valuation of around $4.9 billion.
“We have taken a difficult decision to part ways with 251 Meeshoites constituting 15 per cent of the employee base, as we look to work with a leaner organizational structure to achieve sustained profitability,” said a Meesho spokesperson.
“We are committed to ensuring all those impacted have our full support and will be provided with a separation package that includes a one-time severance payment of 2.5 to 9 months (depending on tenor and designation), continued insurance benefits, job placement support and accelerated vesting of ESOPs. We remain grateful for their contributions to building Meesho,” said Meesho spokesperson.
Many Meesho employees had taken the decision to relocate to Bengaluru recently. For anyone who moved to Bengaluru from January 2023 till May 5, will get reimbursement as per the current relocation. An amount equivalent to the claim amount will be paid as an allowance to cover any costs towards relocation back to the hometown.
In his letter, Aatrey said that while Meesho is confident that the business will stay strong, the economic reality is here to stay. “We are now faced with the hard truth of aligning our people costs with the new projections for our business. We should have done better here,” said Aatrey. “For those who are leaving, I say thank you and that I truly am sorry.”
While Meesho is much smaller in size (Gross merchandise value terms) versus Flipkart Group and Amazon India, its average monthly active users count is about 55 per cent of the incumbents, according to a recent report by brokerage firm Jefferies.
Meesho had 120 million average monthly active users on its platform in 2022. Over the last two years, Meesho added about 100 million MAUs, much higher than additions by peers.
The Jefferies report said that Meesho scores well on all stages of an online purchase journey, including awareness (measured by app downloads), consideration (measured by MAUs) and transaction (measured by MTUs).
“Meesho is India’s third largest e-commerce retailer with a CY22 GMV of $4.5 billion and a 7 per cent market share, growing much faster than the overall e-commerce market,” said the Jefferies report.
