SoftBank-backed e-commerce platform Meesho has sacked 15% of its total workforce or nearly 251 employees, joining a long list of startups that have had to trim their workforce amid a tough macroeconomic environment through last and this year.
“As leaders, we made Judgement errors In overhiring ahead of the curve. At the same time, we could have run our org structure in a more effective and lean manner overall. Our spans and layers were inflated, and this could have unintended consequences on our speed to execute,” Meesho's chief executive officer Vidit Aatrey said in an email to employees on Friday.
“While we are confident that Meesho's business will stay strong, the economic reality is here to stay. We are now faced with the hard truth of aligning our people costs with the new projections of our business. We should have done better here,” he added.
This is the third round of layoffs at Meesho in about a year. The startup in August 2022, had laid off nearly 300 employees from its grocery vertical Superstore, which was then operational in cities across six Indian states. It had also given pink slips to about 150 employees in April last year.
Employees impacted in the latest layoffs will receive full pay for the notice period and one additional month, along with a tenure-based payment of 15 days' pay for every completed year of service, rounded up to the nearest year.
Moreover, all ESOP (employee stock ownership plan) holders would receive equity benefits, including the dropping of the one-year vesting period on ESOPs, acceleration of vesting for ESOPs due to vest on August 5th, 2023, and equal treatment during a buyback event in May 2024.
Meesho would also extend family insurance coverage up to March 31, 2024, and reimburse relocation costs for those who relocated to Bangalore since January 1, 2023. The company would also provide support for placement, including formal and informal channels.
Meesho, which was founded in 2015, started off as an Indian social commerce platform which enabled individuals to start selling online. However, over the years, it has now become a full-fledged ecommerce platform taking on the likes of e-commerce major Amazon and homegrown rival Flipkart.
Its sellers are mostly from tier-2 cities and target customers in smaller towns. It garners nearly half of its sales from apparel. It also sells products such as kitchen appliances, jewellery, footwear and grocery.
The startup raised $570 million in September 2021 in a funding round led by y Fidelity Management & Research and Facebook co-founder Eduardo Saverin’s B Capital Group at a valuation of $4.9 billion.
In the financial year 2022, Meesho reported a 5x surge in its net loss at Rs 3,247.8 crore for FY22 against a loss of Rs 498.7 crore in the preceding fiscal year. On the other hand, its revenue jumped nearly four times to Rs 3,232 crore from Rs 838.6 crore in FY21.
Meesho is aiming to turn Ebitda (earnings before interest, taxes, depreciation, and amortization) positive by mid-2023 before preparing for its public listing, Aatrey said in a company-wide town hall meeting in September 2022.