TechCity has gathered that e-commerce powerhouse Konga fired 70% of its workforce and the affected workers got informed about the termination of their appointment via a Video Conference call with the CEO of the company, Shola Adekoya. Adekoya informed them about the development and why the company was taking the action.
Each affected staff member got a handsome severance package from the company.
Reasons behind the action
Last night, circumstances surrounding the action taken were largely hear-say; ranging from reports that the company did not have enough money to a purported managerial downsizing. Nothing factual or credible to be reported. But this morning, in an attempt to be ahead of the discussions, the management of the company issued a statement explaining the rationale behind the action saying it is overhauling its strategy starting with scrapping pay on delivery option.
“This decision was taken as part of its measures to become more efficient and to focus on the orders that consumers really want,” Konga said in a statement gotten by TechCity.
According to Adekoya, the company in recent years explored several solutions for payment and ecommerce in Nigeria and concluded that prepaid is the necessary approach for our business and the market.
“Given the cost of inflation and increasing challenges managing payment-on-delivery, as well as the resulting level of order cancellations on the platform, we had to take this decision,” he said.
While informing customers about the change in policy, he said buyers can still directly talk to sellers in case they both want to offer the option. Although this may not work as sellers had been complaining about the numerous problems associated with pay on delivery.
Adekoya said the platform actually transformed to a prepay only platform in mid-November 2017, and there has been a solid shift towards online payment by customers.
“Since we switched over, we have seen a marked increase in online payment which is a much more seamless experience and we sincerely appreciate all our customers who have trusted us enough to begin paying online for their orders” he said.
Ending warehousing activities
He also revealed that the company is closing its warehouses which he said is responsible for a headcount reduction as well as scrapping Konga Daily; its grocery delivery service.
“Letting go of colleagues and friends is not an easy decision, but one that naturally stems from these changes,” Adekoya said.
The statement did not say much about the fate of the current warehouse facilities but it said enough. Konga will not offer warehouse services again which means it will be saving money on the expensive cost of running warehouses and as such, it had to let go of its affected workers.
How will the market respond to the end of pay on delivery and how will the end of warehousing affect the company’s operations? Only time with tell.