Homegrown e-commerce platform Shopback has cut 24 per cent of its Group headcount, equivalent to 195 jobs, on Mar. 19, 2024.
This decision was made after the company "explored and exhausted all viable alternatives to reduce costs," said ShopBack's chief executive officer and co-founder Henry Chan.
A company town hall was held on the same date to inform all employees about the layoff.
A message from Chan to his employees was also posted on the company's website.
According to Chan's message, the severance package for affected employees will include pay for at least two months of their notice period, one month of severance for every full year of service, a bonus equivalent to one month's pay, and an extension for medical insurance coverage up till Jun. 30, 2024, among other measures.
ShopBack will also be covering repatriation costs, including airfare and a budget for moving expenses, for affected employees on work visas.
Tried various ways to reduce costs
In his message, Chan provided a timeline of how the company arrived at this decision, which he described to be "one of the hardest decisions" he has ever made in the company's 10-year history.
According to Chan, Shopback increased its headcount from 550 to over 900 in 2021 and early 2022, when "the economy favoured expansion over sustainability".
ShopBack's website showed that during this period, the company launched ShopBack Pay and PayLater after acquiring buy now pay later (BNPL) provider Hoolah.
The company has since announced that it would be discontinuing its BNPL service from Mar. 22, 2024, reported The Straits Times.
Shift in market sentiments during Q2 2022
Chan said aggressive growth eventually became "an unsustainable long-term strategy" and the company had to focus on cost efficiency instead because of a shift in market sentiments during the second quarter of 2022.
Subsequently, ShopBack tried to reduce costs by cutting back "significantly" on remuneration, implementing pay freezes, removing performance bonuses for leaders, and removing over 100 full-time positions they were hiring for, amongst others.
However, sustainable growth continued to remain "a challenge".
While the company now has "a clearer strategy for 2024 and beyond" and cash reserve to achieve its goals, Chan said it had become clear to him that "a leaner and more agile team" that is "significantly different" from ShopBack's current organisational structure, is needed.
For the financial year which ended in March 2023, ShopBack posted $87.7 million (S$117 million) in revenue, which translated to a 20 per cent year-on-year decline, reported The Business Times.
The company's losses before tax also increased by 29 per cent year-on-year, despite its launch in Hong Kong in the second half of 2022 and Germany in 2023.
Chan admitted to expanding too rapidly
Chan also admitted in his message that he had "made the mistake of pursuing too many directions as a company" and expanding the team "too rapidly".
He also said he took "full responsibility" for the decisions that led to the current situation, and shared that he was "truly sorry" for all the ShopBackers affected.
As for his remaining employees, Chan said the company will share more on its path forward in the coming days and weeks as the layoff will "necessitate changes" in its workflow.
"While today is a challenging day in our journey, let's navigate through these tough times together and come out strong," wrote Chan.
A few affected employees have since shared about the layoff on their LinkedIn profiles.
Tech layoffs likely to continue
ShopBack does not appear to be the only tech company in Singapore that is downsizing its workforce.
In January 2024, e-commerce company Lazada made headlines for laying off up to 30 per cent of its staff globally.
According to the executive committee chair of SGTech, Wong Wai Meng, tech layoffs are likely to continue in the year ahead as companies continue responding to "ongoing economic challenges", reported The Straits Times.
Across the globe, 50,312 individuals who identified as tech employees claimed they were laid off by their companies since the start of 2024, according to tech layoff tracker Layoffs.fyi.
Top images via ShopBack & Google Maps