The round of layoffs taking place at Alibaba-owned Lazada in Southeast Asia signals tougher competition in Thailand's e-commerce sector as players jockey for profit growth to increase investor confidence and prepare for new rivals.
CNBC reported on Thursday that Lazada had begun a fresh round of layoffs across Southeast Asia, according to a person with direct knowledge of the matter.
A source familiar with Lazada Thailand told the Bangkok Post there would be layoffs as well as staff rotation to more suitable posts across the company's departments and functions.
"Although the company is profitable, the industry is highly competitive and firms need to control fixed costs," said the source.
Lazada Thailand declined to comment on the matter when contacted by the Bangkok Post. As of March 2023, Lazada Thailand employed more than 1,100 people.
Paul Srivorakul, group chief executive of aCommerce, an e-commerce enabler based in Southeast Asia, said the business environment has changed significantly as public investors expect e-marketplaces to post stronger profits, not only sturdy topline growth or market share.
Investors are rewarding companies that make aggressive cost cuts, he said, noting that Spotify shares jumped 7.5% on Dec 4 following news the company planned to lay off 17% of its global workforce.
Lazada's parent company, Alibaba International Digital Commerce, needs to show sustainable growth with healthy unit economics, Mr Paul said.
According to data analytics provider Creden Data, Lazada Thailand posted a profit of 400 million baht from revenue of 20.7 billion baht in 2022. Lazada Logistics Thailand generated a profit of 2.9 billion baht from revenue of 16.8 billion during the same period.
According to Singapore venture builder Momentum Works, Shopee gained a 56% share of Thailand's e-commerce gross merchandise value (GMV) of US$14.4 billion in 2022, while Lazada had 40% and TikTok 4%. Out of a GMV of $99.5 billion within Southeast Asia, Shopee claimed a 47.9% share and Lazada 20.1%.
According to Pawoot Pongvitayapanu, founder of Tarad.com, the value of Thailand's e-commerce market is expected to reach almost 700 billion baht in 2024, up from an anticipated 634 billion in 2023, as the quantity and value of online shopping increases.