E-commerce firm Konga has reportedly downsized about 60% of its work force. The company has also stopped the pay on delivery option and warehousing services for merchants. Konga has however created a pay on delivery option for direct transactions between buyers and sellers.
While the exact number of staff laid off is unknown, Konga’s Chief Executive Officer (CEO) Shola Adekoya confirmed the changes, and gave the rationale behind them.
Given the cost of inflation and increasing challenges of managing payment-on-delivery, as well as the resulting level of order cancellations on the platform, we had to take this decision. Unfortunately, this resulted in a headcount reduction. With the support of our investors, those impacted will be duly compensated.
The move is not surprising
The cost cutting measures are not surprising in view of the difficult business environment in the country. E -commerce businesses have been affected by the sharp depreciation in the foreign exchange rate, and increase in operating costs.
Adopting the prepaid option, reduces funds that would have been tied down on inventory. Konga’s competitors, Payporte and Jumia had earlier switched to the prepayment option.
Konga was founded in July 2012 by Sim Shagaya. The company is 40.22% owned by South African media giant Naspers, and has raised over $200 million in several funding rounds since its inception.