Daraz lays off 60 percent workforce from Nepal, daily activities controlled by Bangladesh office

KATHMANDU: Daraz, a prominent e-commerce platform owned by Chinese e-commerce giant Alibaba, has laid off 280 workers from its Nepal office. This decision marks a significant reduction in the workforce, impacting 60 percent of its employees in Nepal. The Bangladesh office now oversees the daily operations of the Nepal branch.

A high-ranking official from Daraz informed Fiscal Nepal that all 280 dismissed employees are Nepali. “The company provided a 15-day notice period for employees to justify their positions at Daraz,” the official stated. However, the justifications provided were deemed unsatisfactory, leading to their dismissal.

“Most of the staffers have been let go since the beginning of 2024,” the source added. Before the layoffs, Daraz’s Nepal office employed 300 people.

In March 2024, Daraz published an internal report announcing plans to restructure the company to create a more streamlined and agile organizational structure. James Dong, the company’s CEO, addressed the layoffs in a memo circulated internally.

“Reluctantly, we will bid farewell to many valued members of the Daraz family,” Acting Chief Executive James Dong said in the memo published on the company’s website. “Despite our efforts to explore different solutions, our cost structure continues to fall short of our financial targets. Facing unprecedented challenges in the market, we must take swift action to ensure our company’s long-term sustainability and continued growth,” he added.

Senior officials from Bangladesh confirmed to Fiscal Nepal that the layoffs are ongoing and that a third round of staff reductions is planned for Nepal. This decision is aimed at improving the company’s overall performance. The officials cited various factors such as inflation, supply chain disruptions, yearly changes in the tax regime, and the ban on TikTok as major reasons for reducing the workforce in Nepal.

The Bangladeshi officials further stated that they plan to maintain the workforce in Nepal at around 80-90 persons, including foreign workers. “After the series of layoffs, we have taken control of the daily operations of the Nepal office from Bangladesh,” the officials informed.

Laitare Mishra (name changed for personal reasons), an ex-employee, expressed his disappointment with the company’s handling of the layoffs. He mentioned that the company paid only 80 percent of their salaries and benefits, which was supposed to be provided in full. “The company tells us that we will have to wait at least three months to a year to receive full payment,” he added.

“I have been working since Kyamu.com.np. I never thought that I would lose my job in the middle after working for so many years. The new management has made things difficult,” Mishra said.

According to Reuters, Daraz employed approximately 3,000 staff across the region. The company cited challenging market conditions, escalating costs, distribution hurdles, increased taxes, and reduced government support as reasons for the layoffs.

The layoffs at Daraz Nepal are a reflection of broader economic challenges facing the region’s e-commerce industry. With rising inflation and supply chain issues, many companies are struggling to maintain profitability. The increased customs duty and changes in the tax regime have further strained the financial health of these businesses.

“The restructuring at Daraz aims to create a more efficient and cost-effective operation. By consolidating control under the Bangladesh office, Daraz hopes to streamline its processes and improve its market responsiveness,” the Bangali official said.

However, the layoffs have sparked concern among employees and industry observers about the future of e-commerce employment in Nepal. The impact of these layoffs is significant, not only for the employees who have lost their jobs but also for the broader economy.