E-commerce unicorn financed by Softbank Meesho has announced its second wave of layoffs in less than a year, which would result in the termination of 251 workers, or around 15% of its staff.
Co-founder and CEO Vidit Aatrey informed the workers of the company of the decision in an email dated May 5. He stated the difficult macroeconomic situation as his justification.
The Bengaluru-based company, which was among the first few new-age businesses to reduce employment in a challenging funding climate, let off 250 workers from its grocery division last year. Farmiso was replaced by Superstore. But the most recent round is Meesho’s first using its primary business model, a marketplace.
“As leaders, we erred in overhiring people who were ahead of the curve. At the same time, Aatrey wrote in his email, “We could have run our organisational structure in a more efficient and lean manner overall.
“Our spans and layers were bloated, which may have had unforeseen effects on our execution speed. The economic situation will not change, even though we are optimistic about the future of the Meesho industry. We must now accept the harsh reality that our labour costs must be in line with the updated company projections. We ought to have performed better here, he continued.
In the following 60 minutes, an email will be sent to the affected employees informing them of the status of their employment with the organisation. According to the email, meeting links will then be personally sent to promote one-on-one discussions between the staff members and their managers. However, departing employees will still have access to their Gmail and Slack channels through Sunday night.
A Meesho representative said, “We have made the difficult decision to part ways with 251 Meeshoites, representing 15% of the employee base, as we look to work with a leaner organisational structure to achieve sustained profitability.”
The separation package will include a one-time severance payout ranging from 2.5 to 9 months (depending on the tenor and designation), continuous insurance benefits, help with job placement, and accelerated vesting of ESOPs. We are committed to making sure that everyone affected has our full support. We are still appreciative of their assistance in creating Meesho.
Employees will get full pay for their notice period, an extra month, and a tenure-based payout of 15 days pay for each year of service that has been completed, rounded up to the next full year, as stated in the email. Until March 31, 2024, the company said it would also continue to offer family insurance coverage. And will flex ESOP vesting rules so that departing workers continue to own stock in the business.
In addition to reducing its personnel, Meesho has, as previously reported, cut its cloud expenses by 50%. In fact, according to an interview with Moneycontrol’s Dhiresh Bansal conducted in December of last year, Meesho has reduced its monthly cash burn by 90% to about $4 million.
Meesho is nearing 0% cash burn, is aiming to achieve EBITDA breakeven over the course of CY23, and has a cash reserve of about $400 million, according to analysts at Jefferies who spoke with the management.
Aatrey’s mail from May 5 stated, “While our cash reserves cushion us well for these trying conditions, we need to continue exceedingly conservative on the expense front.
According to data from Tracxn, Meesho has raised over $1 billion and is currently valued at $4.9 billion. In a market where titans like Walmart’s Flipkart and Amazon also compete, Jefferies analysts said that it is India’s top e-commerce platform with a gross merchandise value (GMV) of around $4.5 billion and a 7% share. Meesho, though, is “growing well.”
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