The e-commerce giant, which earns its main revenue from shipping goods, has decided not to chase turnover and improve the profitability of the company.
Lazada Thailand plans to change management and lay off or reassign between 30 and 50 per cent of its employees to more suitable positions in various divisions of the company, a source who requested anonymity told the Bangkok Post.
Chief Executive Officer Veerapong Gu will leave the company to pursue other ventures, and 30 to 50 per cent of the company’s employees will be dismissed or transferred to more suitable positions in various departments and divisions of the company, a source close to the e-commerce platform operator said. Lazada Thailand employed more than 1,100 people as of March 2023.
The company is expected to appoint chief operating officer Waritha Kiatpiniochai, who has worked at Lazada Thailand for nearly eight years, to replace Weerapong. Prior to joining Lazada Thailand, Waritha worked at Macquarie Group. Lazada Thailand’s press office declined to comment on the matter.
Lazada has begun a new round of layoffs across Southeast Asia, CNBC also reported, citing a source with direct knowledge of the matter.
Another source familiar with Lazada Thailand said that while the company remains profitable in the current economic climate, Lazada needs to become leaner and more efficient to compete with strong rivals such as Shopee and TikTok Shop.
“The company’s brand is firmly established in the market, so fewer employees are required, and the marketing budget can be reduced. The company wants to rotate staff and create a lean organisation,” the source explained.
According to analyst firm Creden Data, Lazada Thailand’s profit in 2022 was 400 million baht on revenue of 20.7 billion baht. Lazada Logistics Thailand’s logistics unit, on the other hand, made a profit of 2.9 billion baht on revenue of 16.8 billion baht in the same period.
According to Momentum Works, a Singapore-based venture capital firm, Shopee’s share of Thailand’s gross e-commerce turnover in 2022 will be 56 per cent, Lazada’s share will be 40 per cent, and TikTok’s share will be 4 per cent.
Lazada has long faced a difficult strategic dilemma, according to a report prepared by market research firm Cube Asia. The report notes that the company must decide whether it will pursue top-line sales growth or prioritise profitability.
According to Cube Asia, Lazada has chosen the latter option by focusing on profitability for several reasons.
With Shopee’s intense growth and the emergence of TikTok Shop, competition has intensified, making growth more costly for Lazada. Both competitors are also moving towards profitability, especially Shopee, which has shown several profitable quarters. This means Lazada needs to restructure the business to make it more profitable,” the report said.
According to Cube Asia, profitability is vital for parent company Alibaba to achieve its goal of spinning off Lazada Group. The spin-off also means Lazada Thailand will no longer have unlimited access to Alibaba’s funds, forcing the company to become more self-sufficient.
More Articles Here
More Articles Here
