As layoffs rip through Lazada Group, can it hold its ground in the e-commerce tussle? 

LAZADA Group employees are grappling to make sense of this week’s bombshell firing as layoffs tore through all roles and regions as well as the logistics arm, Lazada Express.

But the retrenchments at the Alibaba-backed e-commerce giant did not surprise some former employees, who spoke on condition of anonymity. Lazada did not pay out bonuses in 2022 despite good performances, and its inability to knock Shopee off its perch when the rival was going through a tough patch were signs that Lazada was not doing well, they suggested.

Sources familiar with the layoffs told The Business Times that the retrenchments stretched from junior to senior roles, with some regional operations affected much more than others. The exact number of employees laid off is unknown, with sources suggesting more is to come.

Earlier media reports speculated that up to 30 per cent of jobs across the region would be axed, and at least 100 people have been sacked in Singapore. According to an Edge report, chief marketing officers in various countries have been let go.

A spreadsheet has been created for Lazada employees impacted by the layoffs to list their roles, location, CVs and LinkedIn profiles. As at 9.30 pm on Friday (Jan 5), 63 people have listed themselves on the spreadsheet, in locations across the region except Vietnam. Roles impacted ranged from associate to senior vice-president.

A “change of direction” was cited as the reason for the layoffs, a source told BT. According to one source, the group’s Malaysian operations suffered an estimated 70 per cent cut in headcount, with the marketing department the worst hit. Some Indonesian teams also lost 50 per cent of their staff, with C-level roles chopped, Jakarta media reported.

Another source said the Singapore logistics team was hit quite hard, with many empty desks now. Some Lazada sellers in Malaysia complained that their goods have not been picked up for delivery.

Some noted that Lazada’s logistics operations have been plagued by lack of proper planning, leading to jams coming in and out of warehouses, with logistics assets not being fully utilised.

Lazada did not respond to queries. A spokesperson was quoted as saying on Wednesday evening that the company is “making proactive adjustments to transform our workforce, to better position ourselves for a more agile, streamlined way of working to meet future business needs”.

“This transformation necessitates that we reassess our workforce requirements and operational structure to ensure Lazada is better positioned to future-proof our business and people.”

The e-commerce player has cycled through several changes in top leadership. James Dong became regional CEO in June 2022, taking over from Chun Li who succeeded Lazada co-founder Pierre Poignant in 2020. Loh Wee Lee left the Singapore CEO position in August 2023, and was replaced by Jason Chen.

The mood in Lazada’s offices has been tense since the layoffs started rolling out on Wednesday, with remaining employees in limbo as it was unclear if the people they worked with survived the cut. Some departments had earlier begun to consolidate and merge with others, according to a source who was retrenched.

Lazada appears to be conserving its resources for the long e-commerce war, said Li Jianggan, managing director at consultancy Momentum Works, as incumbent Shopee and new entrant TikTok ramp up aggressive growth.

But it seems that Lazada has not figured out how to position itself in the new e-commerce reality where TikTok and Shopee are battling it out. Li observed that some of Shopee’s leadership were prepared to accept the fact that it might be No 2 in gross merchandise value in Asia.

“I think everyone knows it’s difficult for Lazada to be No 1. As of last year, the senior managers have a different understanding of where they should be,” said Li.

TikTok coming out on top would send a signal that pure e-commerce platforms are not tenable, Li said. Furthermore, Lazada has not positioned itself as a cheap option, having long held associations with brands through Tmall.

Regionally, Lazada has heavily marketed Choice, its cross-border consignment model, as an alternative to Pinduoduo’s Temu consignment platform. But its positioning in that arena is a premium one, with brand ambassadors that include South Korean stars.

“At the end of the day, where would that lead them to, how will the brands perceive it? How do they find a profitable market position for the long term? I think this is something they have been thinking about a lot,” said Li.

Since co-founder Jack Ma’s statement in June 2017 that he wants Alibaba to serve two billion customers, the company has been allocating resources to international markets. Li sees the injection of US$845 million in July 2023 as a show of Alibaba’s commitment to Lazada.

Current reforms at Alibaba have centred on decluttering decision-making and streamlining processes. The latest layoffs might be an attempt at making decision-making quicker at Lazada.

Li noted that sellers have complained constantly about local teams always needing to defer to the regional team for approval. Streamlining that process would allow Lazada to allocate resources more easily.

The layoffs are just part of the competitive challenges that Lazada is facing in South-east Asia. The speed at which the e-commerce landscape has shifted has been dramatic, with TikTok Shop coming out of nowhere to gain significant market share within a year.

“I believe that the assessment of where Lazada should be by management is probably very different from the assessment a year or two years ago,” said Li.