Layoffs hit Indonesian fashion ecommerce startups

Some Indonesian ecommerce companies are forced to cut costs.

Yesterday, Tech in Asia learned that fashion startup Sale Stock let go of 220 people. The figure was reported by one of the employees affected by the cut. The employee added most of those laid off were from the customer service department.

Via a spokesperson, Sale Stock co-founder and CEO Lingga Madu confirmed to Tech in Asia that layoffs occured, though he didn’t give an exact number. He admitted that it affected more than 100 people and that the company trimmed overall salaries by 13 percent.

Despite this, Sale Stock is still in the process of hiring new personnel for technical positions.

Sale Stock is a mobile-first ecommerce startup that sells its own women’s fashion label at affordable prices. It’s funded by Ardent Capital and became part of Wavemaker’s portfolio when the two funds recently merged.

Wavemaker hasn’t responded to requests for comment.

Berrybenka sees “minor” cuts

Berrybenka CEO Jason Lamuda.

Sale Stock isn’t alone. Another fashion ecommerce startup that recently let go of staff is Berrybenka.

CEO Jason Lamuda told Tech in Asia that the layoffs were “minor,” but didn’t answer how many employees were affected. “Our plan is still the same: keep healthy growth and further boost profitability.”

Berrybenka’s last disclosed round of funding was in 2013, when it received US$5 million from TransCosmos and Gree – a sum that pales compared with the reources available to some startups in the same category, like Rocket Internet’s regionally operating Zalora.

Time to buckle down

But even Zalora is facing a tough time. A hefty US$700 million in losses this year, parent company Rocket Internet says, were mostly due to “underperforming companies” in its Global Fashion Group, which includes Zalora.

In Indonesia, local fashion ecommerce players set out under the premise they can do better than Zalora. Their advantage, they think, is a deeper understanding of what the market wants and their ability to stay nimble and focused when times get tough. It may be their chance to prove that now.

We’ve heard from multiple sources that in the current funding climate, VCs are looking for clear paths to profitability rather than hyper growth. Startups that show they can quickly restructure and be more efficient have a better chance at meeting new investor expectations.

To veteran VCs like Willson Cuaca of East Ventures there’s nothing unusual about shifts in strategy and headcount. “From time to time, startups will look at their expense strategy and make some adjustments,” he said. East Ventures backs multiple ecommerce startups in Indonesia, including BerryBenka.

What’s happening to the employees?

For employees, massive layoffs usually come as a shock and leaves them questioning why they were hired in the first place.

In Sale Stock’s case, Lingga assures, the startup has done everything to ensure its former employees land softly. “We’ve had a career workshop, gave them recommendation letters, and counseling,” Lingga said. “We hope we can hold on to our people-centric culture that’s always been part of our basic operations, through this challenging transition.”

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from Tech in Asia https://www.techinasia.com/salestock-berrybenka-trim-down-headcount
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