“I have a difficult news to share today. We are reducing the size of the Meesho workforce by 15%, affecting 251 employees,” Aatrey said in his email.
“As leaders, we made judgement errors in over-hiring 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,” he added.
Valued at $5 billion, Meesho competes with the the ecommerce majors Flipkart and Amazon.
Also read:Inside Meesho’s reset: to cut cash burn, brace for slower growth
Meesho joins a growing list of Indian startups that have been downsizing their employee amid a larger reset in the technology industry globally.
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ETtechAatrey said while he is 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’s costs with the new projections for our business. We should have done better here, he said, adding that Meesho grew ten-fold from 2020 to 2022, helped by Covid tailwinds and aggressive investments.
“ Even as we tracked our plans, the macro climate undeniably and considerably changed. As a result, we have had to accelerate our timeline to profitability as part of Project Redbull, while readjusting our GMV growth goals to 30% YoY,” he said, adding “while our cash reserves buffer us well for these harsh circumstances, we need to stay highly prudent on the cost front.“
The company will ensure the current plan will enable it to invest in the future while also delivering strong, ongoing results, he added.
The affected employees will receive full pay for their notice period and an additional one month, along with a tenure-based payment of 15 days for every completed year of service, rounded up to the nearest year.
It will also extend family insurance coverage till March 31, 2024. And will relax Esop ( employee stock ownership plan) vesting norms so the departing employees remain shareholders in the company. It will extend family insurance coverage up to March 31, 2024
Second round of layoffs
This is the second round of job cuts in just over a year at the SoftBank-backed ecommerce startup. In April last year, the company let go of 150 employees as it restructured its grocery business Farmiso. Since last year, Meesho has been on a cost-cutting strategy to turn profitable.
ETtech reported earlier that the ecommerce startup reduced its cash burn to $5 million per month from $40 million, till last year.
Aatrey had told us that the company was looking to further cut the spend by the July-September period. The company had last raised funds in 2021, when it received an infusion of $570 million from Fidelity and others.
ETtech had reported last year how the startup, which took on bigger rivals Amazon and Flipkart, was shifting gears and bracing for relatively slower growth amid a slowdown in big-ticket funding and an adverse macroeconomic situation.
Meesho’s internal initiative ‘Project Unbundle’ last year gained prominence as it is focused on reducing costs across the board and on monetisation.
Meesho started working on ‘Project Unbundle’ in 2020, but implemented it only from January last year.
It had been actively pushing sellers to adopt services like its new return policy over the last two months, sellers told ET.
As part of the project, the Bengaluru-based company had begun offering discounts on products, with the condition that they can only be returned if they are defective.