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Alibaba's South Asian e-commerce unit Daraz to conduct new round of lay-offs

Daraz Group - the leading e-commerce company in South Asia, excluding India, owned by Alibaba Group Holding - is set to conduct a new round of lay-offs amid "unprecedented challenges in the market", a year after slashing 11 per cent of its workforce.

"Reluctantly, we will bid farewell to many valued members of the Daraz family," acting chief executive James Dong said in an internal memo published on the company's website on Tuesday. Alibaba, owner of the South China Morning Post, acquired Daraz in 2018.

"Despite our efforts to explore different solutions, our cost structure continues to fall short of our financial targets," he said. "Facing unprecedented challenges in the market, we must take swift action to ensure our company's long-term sustainability and continued growth."

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Dong, who also runs Alibaba's Southeast Asian e-commerce unit Lazada, was appointed to head Daraz in January.

A Daraz Express rider makes a same-day delivery run in Pakistan. Photo: Daraz alt=A Daraz Express rider makes a same-day delivery run in Pakistan. Photo: Daraz>

The number of Daraz employees - spread across the company's Pakistan, Bangladesh, Sri Lanka and Nepal operations - to be affected by the latest job cuts was not disclosed.

The company did not immediately respond to a request for comment on Wednesday.

In spite of the new lay-offs, Dong said in his memo that Daraz remains committed to maintaining its regional presence, with a focus on "improving the consumer experience by diversifying our offerings of value-for-money products and expanding our product categories", as well as "enhancing the operational efficiency of sellers".

The latest job cuts at the firm show that some units under Alibaba's International Digital Commerce Group, which includes Daraz and Lazada, still need to optimise their operating efficiency to boost sales and narrow losses. Led by international online shopping service AliExpress, this group's combined orders in the December quarter rose 24 per cent year on year.

In February last year, Daraz announced job cuts that affected 11 per cent of its workforce, or about 360 people, amid headcount reductions across the broader technology industry owing to an economic slowdown caused by the Ukraine war, global supply chain disruptions and soaring inflation, among various factors.

Launched by German company Rocket Internet in 2012 as a small fashion retailer in Pakistan, the larger Daraz Group was formed in 2015 with expanded operations in Bangladesh. It acquired rival online shopping platform Kaymu in 2016 to enter Sri Lanka and Nepal.

Daraz now has more than 30 million monthly active users across Bangladesh, Pakistan, Sri Lanka and Nepal, according to the firm's website. Alibaba acquired Daraz from Rocket Internet a few years after buying a controlling stake in Lazada from the German firm in 2016.

Revenue from Alibaba's international operations increased 44 per cent year on year in the December quarter to outperform the Hangzhou-based company's core China e-commerce business under Taobao and Tmall Group, which grew 2 per cent in the same quarter.

Alibaba, however, continues to face stiff competition outside China from younger online shopping platforms, including Shein, PDD Holdings-owned Temu and TikTok Shop, operated by ByteDance.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.