Twiga In Yet More Brutal Shakeup To Arrest Mounting Struggles
Kenyan B2B e-commerce scaleup Twiga is navigating challenging macroeconomic conditions by implementing another round of layoffs. The company will lay off 283 employees, constituting 33 percent of its 850-strong workforce, as part of a strategy to create a leaner and more cost-effective organization.
Twiga’s new operational adjustments include eliminating its in-house delivery service, which utilized leased trucks. Instead, the company plans to hire contractors on an as-needed basis. In conjunction with this change, Twiga is launching a logistics marketplace that will connect its delivery services with independent truckers. This approach is expected to reduce logistics costs by 40 percent.
Additionally, the company has shut down 10 distribution centres in Nairobi and consolidated operations in a modern 200,000-square-foot warehouse inaugurated last year. Twiga aims to enhance operating efficiency by centralizing its distribution efforts.
Twiga’s product lineup encompasses the Soko Yetu platform, enabling vendors to purchase from a selection of suppliers, and Twiga Fresh, its flagship fresh-produce venture aimed at addressing traceability challenges, stock shortages, and price fluctuations.
Co-founder and CEO Peter Njonjo emphasized that while these changes are in response to economic shifts, Twiga’s operations are ongoing. The company’s Western Kenya operations continue, and it is actively working on improving efficiency in the region.
Njonjo attributed the adjustments to the changing macroeconomic landscape and customers’ reduced purchasing power. As venture funding becomes more constrained globally, startups are experiencing pressure to optimize their operations for resiliency. Twiga joins the ranks of other African and global startups, including B2B e-commerce platforms like Copia and MarketForce, that are recalibrating their strategies to navigate the evolving investment landscape.
Over the past couple of years, investors have been pouring money into African tech, and one of the most appealing sectors to invest in has been e-commerce businesses using the business-to-business (B2B) model to serve small shops in the last mile. These companies in Africa raised USD 638 M in total in 2022, up more than 124 percent from the previous year, which also witnessed a few mega fundraising, according to Partech data.
However, despite the capital glut, B2B e-commerce companies have been forced to scale back due to new, grim funding realities and difficulties in the markets they service. Twiga, along with other well-known businesses like MarketForce, Alerzo, and Copia, has resorted to drastically cutting back, which has led to the discontinuation of some operations and layoffs that have affected hundreds of jobs.
Previously, Twiga carried out a downsizing effort last November that affected 21 percent of its workforce at that time. This resulted in the departure of approximately 211 employees and the discontinuation of its sales team. Fast forward to June 2023, the company officially acknowledged these layoffs. However, it contended that the sales team had not been laid off but rather transformed into “free agents.”
Citing the prevailing challenging business landscape, Twiga attributed the subsequent round of layoffs to the need for adaptation. CEO Njonjo explained that the company had been actively engaged in a transformative process over recent months, with the aim of streamlining operations and cultivating a leaner, more adaptable, and cost-effective organizational structure. These efforts were undertaken to enable the company to navigate and endure the complexities of the current economic climate.
The ramifications of the latest wave of layoffs will extend to employees across Twiga’s various operations in East Africa. The company assured that it will adhere to relevant labour regulations in ensuring proper compensation for the affected individuals.