In response to the downsizing plan at Daraz, Pakistan’s largest e-commerce company, CEO Bjarke Mikkelsen has resigned after serving for eight years. The company aims to cut costs by laying off employees from top to bottom management, targeting a reduction of at least 25% of its workforce.
Bjarke’s departure was announced earlier today, with James Dong, CEO of Lazada Group (another Alibaba subsidiary), appointed as the acting CEO of Daraz. Bjarke, expressing his best wishes for the company’s survival in the competitive e-commerce space, cited a desire to prioritize his family as the reason for leaving Daraz.
Interim CEO James Dong is expected to focus on deeper integration between Daraz and its sister companies, including Lazada, Trendyol, AliExpress, and Alibaba.com.
Sources within Daraz revealed that Bjarke served as a figurehead who implemented decisions from Alibaba, having previously worked as a banker. There are reports suggesting that Trendyol, a Turkish e-commerce company and an Alibaba group member, may take over Daraz, with approximately 86% ownership by Alibaba.
Daraz, operating in the e-commerce markets of Pakistan, Bangladesh, Myanmar, Nepal, and Sri Lanka, has become a significant player since its inception. The decision to lay off employees, including C-level positions, comes as part of a broader cost-cutting strategy observed across Alibaba’s entities.
Reports indicate that Trendyol may take control of Daraz as part of the ownership structure within the Alibaba group. Daraz had previously announced a global workforce reduction of 11% under its former CEO, citing reasons such as geopolitical conflicts, supply chain disruptions, inflation, taxes, and subsidy eliminations to improve profitability and streamline the organization.
In 2022, Daraz incurred group-level losses of $143 million, up from $113 million in 2021, according to the Rest of the World. This downsizing decision aligns with the company’s ongoing efforts to address financial challenges and enhance operational efficiency.