Homegrown e-commerce platform Meesho has cut about 15% of its workforce, or 251 employees, as part of a restructuring exercise.
"We have taken a difficult decision to part ways with 251 Meeshoites, constituting 15% of the employee base, as we look to work with a leaner organisational structure to achieve sustained profitability," a Meesho spokesperson said.
The Vidit Aatrey-led company said all impacted employees will be provided a separation package that includes a one-time severance payment of 2.5 to 9 months, depending on tenor and designation, continued insurance benefits, job placement support, and accelerated vesting of ESOPs.
In an email to employees viewed by BQ Prime, Aatrey said the company grew 10 times 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% year-on-year."
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While Meesho's cash reserves are enough for these "harsh circumstances", the company needs to stay highly prudent on the cost front, he wrote in the email.
"As leaders, we made judgement errors in over-hiring ahead of the curve. At the same time, we could have run our organisational structure in a more effective and lean manner overall ... While we are confident that Meesho business will stay strong, the economic reality is here to stay. We are now faced with the hard truth of aligning people's costs with the new projections for our business. We should have done better here," he wrote.
Softbank and Meta-backed Meesho are already contribution margin positive from pre-marketing and indirect spends and are on track to achieve Ebitda breakeven over 2023, Jefferies said in an April note.
The layoffs continue to highlight the tightening of funding for tech companies around the world as the prioritisation of profits over scale and growth takes precedence.
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