Konga, Nigeria’s eCommerce giant, has reportedly sacked over 300 members of staff, around 60% of its total workforce, in what seems to be a move to drastically reduce operational costs. Konga will also end its pay-on-delivery model, transitioning to prepay-only model.
Konga was launched in 2012. For much of its existence, the company has been locked in a battle over Nigeria’s e-commerce market with Jumia, a startup also launched in 2012 and owned by European startup incubator Rocket Internet. Both companies have struggled, despite significant funding, to establish online shopping as a viable business at scale in Nigeria, given the many logistics and supply chain difficulties in Africa’s largest economy.
According to Quartz, “CEO Shola Adekoya informed staff of the cuts yesterday November 30 and said the company will adopt a leaner business model”. There are also speculations that founding ex-CEO Sim Shagaya may be returning to his role.
After first launching as an online mall in 2012, by 2014, Konga had morphed into a marketplace and began taking commissions on sales of products listed by independent merchants. By the end of last year, Konga had over 10,000 merchants. While the merchants previously listed products for free on Konga’s marketplace, they will now have to pay “rental” fees. Konga will also close its warehouse service, which previously housed merchants’ products but KOS, the company’s delivery service, will remain operational and remain available to merchants. The company will also end its payment-on-delivery option for customers.
Konga has raised over $75 million from investors including Kinnevik, a Swedish investment firm, and Naspers, Africa’s most valuable company. But even being one of the best-funded start-ups on the continent hasn’t protected it from Nigeria’s economic woes. The country has only recently emerged from its first recession in 20 years and it endured a full year of negative growth in 2016. Despite improving its ranking on the World Bank’s latest Doing Business report, the realities for many local businesses suggest that times remain tough.