Ayodeji Ayenuwa
In a recent development, Alerzo, a prominent Nigerian B2B e-commerce startup, has laid off 100 employees, marking the second round of layoffs following a prior reduction of 400 staff in March.
This move aligns with the company’s strategy to optimize operations, enhance profitability, and accelerate its path to break-even, expected by Q3.
Reasons Behind the Layoffs
A spokesperson from Alerzo provided insight into the decision, stating, “As a company, we’ve invested in and built an end-to-end warehouse management system that has improved process automation. These technological investments have enhanced warehouse performance, including turnover and sales metrics. Unfortunately, this has meant streamlining and consolidating certain warehouse roles.“
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Sources familiar with the situation revealed that the recent layoffs predominantly affected employees at Alerzo’s 40 warehouses. The implementation of new software played a crucial role in eliminating several approval lines, rendering specific roles redundant.
To address the impact on the affected workforce, the company outlined severance packages, including one month’s salary, while ensuring that health insurance benefits would remain active until the end of the year.
Historical Context and Business Strategy
This move is part of Alerzo’s ongoing efforts, initiated in 2022, to adapt to increased digitization and optimize internal warehouse operations. In March, the company shut down 14 warehouses across Nigeria.
Despite these decisions, Alerzo remains committed to supporting businesses, particularly those led by women, constituting 90% of its network.
The spokesperson highlighted the broader context, stating, “After its layoff in March 2023, the startup stated that it wanted to restructure and reduce payroll to increase profits. It believed it could accelerate its path to break even more quickly and reach profitability by Q3 this year with the help of the payment licenses it has acquired.”
Founded in 2019, Alerzo positions itself as a comprehensive technology platform supporting over 250,000 businesses, particularly in tier-2 to tier-4 cities in Southwest Nigeria. The startup connects retailers with local and multinational distributors, aiming to simplify operations and reduce costs.
Alerzo faces the ongoing task of balancing restructuring efforts with sustained support for its extensive network of small businesses. The company’s funding history includes a noteworthy $10.5 million Series A round in 2021, showcasing its significance in the Nigerian e-commerce space.
Techrectory with Agency Report.
