Nigerian B2B e-commerce platform Alerzo laid off at least 70 employees in February 2024, despite raising funds twice in the previous year. This follows a larger layoff of at least 400 employees in 2023. The company cited “digitization and a need to create a sustainable business” as reasons for the job cuts, while sources familiar with the matter suggest cost-cutting and extending the company’s lifespan (runway) were the main drivers.
The recent layoffs primarily affected warehouse staff and junior front-office employees. Alerzo confirmed the job cuts but wouldn’t disclose the exact number of employees affected. They claim to have minimized the impact and provided severance packages with extended healthcare benefits for those laid off.
Financial Maneuvers and Industry Struggles
While facing these staffing reductions, Alerzo did secure funding in 2023 (specific amounts unrevealed). It’s unclear if previous investors participated in both rounds. The company has a history of funding, raising pre-seed, seed, Series A, and Series B rounds in the past.
Alerzo’s situation highlights the challenges B2B e-commerce faces in Africa. Many startups in this sector aim to improve inefficient distribution networks with VC backing. However, competition is fierce, with limited differentiation between companies and shrinking consumer spending leading to lower volumes for retailers. Price wars further exacerbate the issue.
Traditional “offline” distributors also pose a significant challenge. These established players move large volumes of goods directly from manufacturers without incurring high tech and marketing costs. Their strong customer networks and ability to secure better rates from manufacturers due to larger purchases further disadvantage startups.
Alerzo’s story highlights the difficulties B2B e-commerce faces in Africa, where established players and a tough economic climate pressure startups aiming to disrupt the traditional distribution model.
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