Zalora lays off its Singapore marketing staff: sources

Photo credit: Zalora

Zalora, Rocket Internet’s fashion e-tailer, has laid off nearly its entire marketing department in Singapore and relocated the function to Kuala Lumpur, three people with direct knowledge of the matter told Tech in Asia.

As many as 50 people were affected by the layoffs, which happened sometime in August, said the sources, who asked for anonymity due to the sensitivity of the situation.

Some of the affected staff whose roles didn’t already exist in the Malaysian office were given the option to move there and offered relocation packages, said one source. Standard relocation packages normally include reimbursement for expenses incurred from moving and cash stipends. Only about two employees decided to move, noted the source.

Those who were not offered roles were supposedly granted severance pay and had until the end of August or the year to leave.

The layoffs came shortly before Zalora brought in a new chief marketing officer: former Red Bull head of digital Elias Pour, who reportedly moved from Australia to Southeast Asia to fulfill his duties. His LinkedIn page says he’s based in Kuala Lumpur.

The decision, though, was a surprise to the employees. “The company had some job openings in Malaysia not long before, but people didn’t think much of it,” said one source.

When asked about the reason for the layoffs, the source noted that it was meant to make the marketing unit sustainable, and ultimately reduce Zalora’s losses as labor is less costly in Malaysia. 

The company has 1,832 employees across the globe, according to LinkedIn. Aside from Singapore and Malaysia, it’s present in the Philippines, Indonesia, Taiwan, and Hong Kong.

Zalora confirmed the layoffs in a statement sent to Tech in Asia, calling it a “restructuring exercise” aimed at “grasping optimization.” However, it didn’t confirm how many employees were affected.

The company argued that its total workforce has significantly increased compared to 2017, and “strong investments have been made and continue [to be] made in our Singapore office.”

The struggle continues

Rocket Internet launched Zalora, along with Lazada, in 2012 in a bid to capture Southeast Asia’s 600 million-strong market. Both had targeted to become profitable by 2015, but continued to record heavy losses. By 2016, Lazada was acquired by Alibaba, which has since pumped more money into the ecommerce firm, allowing it to carry on with its battle for dominance.

Zalora, on the other hand, has supposedly taken moves to trim down costs. In 2015, the e-tailer’s owner Global Fashion Group (backed by Rocket Internet) sold Zalora’s business units in Thailand and Vietnam, according to TechCrunch. In 2017, GFG sold almost half of the fashion ecommerce’s business in the Philippines to a local conglomerate to raise new funds. GFG later clarified, though, that it didn’t sell any of its Zalora Philippines shares but issued new shares instead. 

As Southeast Asia’s ecommerce market heats up, Zalora faces tough competitors, including Bangkok-based Pomelo Fashion, which counts China’s JD as an investor, and Sequoia Capital-backed Zilingo.