India’s Meesho cuts 251 jobs

Meesho has cut 15% of its workforce, or 251 positions, as the Indian social commerce startup cuts expenses to improve its financial health and face “economic reality.”

This is the second round of job cuts at Meesho, which eliminated about 150 positions a year ago. The Bengaluru-based startup, backed by Fidelity, Prosus, SoftBank, Sequoia India and Meta, said in a statement that it wants to “work with a simpler organizational structure to achieve sustained profitability.”

“We are committed to ensuring that all affected individuals have our full support and will be provided with a separation package including a one-off severance payment of between 2.5 and 9 months (depending on term and designation), benefits of continued insurance, job placement support and ESOP enrollment. We remain grateful for their contributions in building Meesho,” a Meesho spokesperson said in a statement.

The job cuts follow Meesho aggressively reducing its cash burn over the past year. The startup is “close to zero cash burn” and aims to breakeven EBIDTA by 2023, its leadership team recently told brokerage Jefferies.

The seven-year-old e-commerce startup, whose sellers are mostly based in smaller cities, has driven a GMV of $4.5 billion by 2022, a nine-fold growth in one year, the startup said at Jefferies.

Meesho is trying to serve an audience that is too price sensitive and doesn’t care about unbranded products. This value proposition has “resonated well with the low- and middle-income customer cohorts in Tier 2+ markets, making up the bulk of the consumer class in India, although traction is also seen in metros/ level 1,” Jefferies wrote.

Compared to traditional platforms, where the average value of a customer’s order is around INR 1,000, or $12.2, Meesho’s AOV is below INR 350, according to Jefferies and people familiar with the matter. According to analysts, this small basket presents unique challenges and opportunities and unlocking it is key to expanding the e-commerce market in India.

“We grew 10x between 2020 and 2022, helped by Covid headwinds and aggressive investments. While we followed our plans, the macro climate undeniably and significantly changed. As a result, we had to accelerate our timeline to profitability as part of Project Redbull, while we have readjusted our GMV growth targets to 30% year-over-year.While our cash reserves protect us well from these tough circumstances, we to be very cost-conscious,” Meesho co-founder and CEO Vidit Aatrey told employees in an email.

He added: “As leaders, we made errors in judgment in over-hiring ahead of the curve. At the same time, we could have run our organizational structure more effectively and leaner overall. Our staff and layers swelled, and this could have unintended consequences on our speed of execution. While we are confident that Meesho’s business will remain strong, the economic reality is here to stay. Now we face the harsh to align our personnel costs with the new projections for our business.”

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The Indian startup Meesho has recently announced that it will lay off a total of 251 employees as part of an efficiency optimization and cost cutting exercise. The move, while difficult, is not unique to the Indian market and comes as the country’s economy adjusts to the effects of the pandemic and attempts to recover.

Meesho, a social commerce platform, is the latest tech firm to take drastic measures to trim its workforce – joining the likes of Airbnb, Uber, and Twitter, which have all had to make similar adjustments in the past year.

The company’s founders, Vidit Aatrey and Sanjeev Barnwal, issued a statement acknowledging the tough decision: “Meesho is growing fast and scaling rapidly. As our business evolves, we have taken a decision to optimize our resources, operations and investments. This decision will help us be leaner and more efficient.”

Meesho was founded in 2015 and provides an online platform that connects resellers with businesses, helping to expand and grow small businesses. Today, thousands of businesses and resellers have used Meesho’s platform to connect and create new products and services.

The changing situation in India and the disruption of the pandemic have raised many questions and continue to affect the tech market. Companies like Meesho, Uber, Airbnb and Twitter have all had to adapt to changing times.

At Ikaroa, we understand the difficult decisions that tech companies are having to make. As a full stack tech company, we are well aware of the importance of resource optimization and cost cutting during tough times. We will continue to monitor the situation in India, and any other technology markets, in our efforts to make the best decisions for our sustainability and growth.


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