Allergo, a Nigerian B2B e-commerce platform that digitizes commerce and payment 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, Allergo had over 2,000 employees (half of whom worked full-time) across Nigeria before the first layoffs last September, affecting 5% of its full-time workforce Was. According to Allergo, the first round of layoffs was performance related and involved the digitization of some roles (including the development of an internal ERP). Meanwhile, the second round of cutbacks due to the profitability push affected 15% of its full-time employees across various departments, leaving the startup with around 800 employees. We could not confirm how many part-time and temporary recruits were let go in both layoffs.
For Allergo, which serves more than 100,000 retailers, the basis for the second layoff isn’t that outlandish. According to a company spokesperson, Allerzo is set to break even in the third quarter of 2021, before the company, which was present only in Ibadan and Lagos at the time, embarks on a major expansion and expands across the country, buoyed by its $10 million+ Series A financing round Overhired.
The company’s e-commerce business is expected to grow 2.3 times (in dollar terms) in 2022 as compared to 2021 due to expansion. and also its payments arm, which the company delivered through acquisitions in Q4 2021; So far, it has registered a ₦200 billion run rate. However, the company, like many others, is looking to restructure and cut payrolls to boost profits, feeling the effects of the broader economy after enjoying rapid growth in 2020-21. Allergo also believes that with the payments license it has received, which will significantly contribute to the digitization of its merchant base, it can accelerate its path to reach break-even and profitability more quickly by Q3 of this year. Is.
Given the past market dynamics, we have hired very aggressively during the past few years to fuel accelerated growth and expansion across the country. This does not align with today’s economic environment, so, unfortunately, we have had to make changes to our business to focus more on 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 drive sustainable growth. We are grateful for the hard work and dedication of all these employees.
For employees who have seen their roles made redundant, Allerzo said it will pay all contractual notice periods, provide an additional one month of severance, HMO coverage (including covered family members) through the end of 2023 Will continue, and provide job placement and counseling services.
Meanwhile, Allergo is one of a handful of African startups that have seen two rounds of layoffs in the past year, including mobility startup SWVL, fintech Chipper Cash and e-commerce startup Sendi. In addition, in what can only be described as a trying few months for African e-commerce organizations, Jumia eliminated 900 positions across its 11 markets, as part of its streamlining efforts in Q4 last year. Due to which 20% of its employees were affected.