Daraz CEO steps down; Approx. 25% of employees could face layoffs

Pakistan’s leading eCommerce company, Daraz, is undergoing significant management changes, with CEO Bjarke Mikkelsen stepping down after eight years.

James Dong, CEO of Lazada Group, another Alibaba subsidiary (Daraz mother company), will act as interim CEO. Mikkelsen cited personal reasons for his resignation, aiming to facilitate a more concentrated strategy and streamlined business model.

The incoming interim CEO will focus on deeper integration between Daraz and sister companies under Alibaba. Reports are suggesting Turkish eCommerce company Trendyol’s potential takeover of Daraz, amidst layoffs affecting up to 25% of Daraz’s global workforce.

Credible sources tell Profit that the company is planning to lay off around 25% of its employees at Daraz globally, which could be 250-400 people in Pakistan. Other sources have quoted as high as 800 people that Daraz could be laying off in Pakistan, including people holding C-level positions in the company.

READ MORE: ‘Daraz’ picks Mindshare as its ‘exclusive media partner’

These layoffs align with Alibaba’s cost-cutting measures, as reflected in recent layoffs at Lazada and overall efforts to boost profitability. Daraz’s losses have been mounting, influenced by challenging macroeconomic conditions and rising competition from vertical eCommerce companies like Bagallery and PriceOye.

For companies like Daraz, the easiest way to boost bottom-line numbers is either to cut marketing budgets or cut employee numbers. Since cutting down marketing costs is going to slow down sales, it’s the employees who get the axe.

The creation of Alibaba International Digital Commerce Group (AIDC) aims to counter competition and enhance efficiencies across Alibaba’s eCommerce entities. The slowdown in Daraz’s growth is expected to impact eCommerce delivery companies, as Daraz outsources a significant portion of its deliveries to third-party logistics firms.

Via: Profit