Online fashion retailer Zalora has cut some 100 jobs, or 15% of its regional workforce, across Southeast Asia in a bid to bolster its finances and complete its “organisational restructuring”.

Confirming initial reports of the layoffs, Zalora said: “These necessary structural changes reflect the need to adapt to a highly competitive market, recalibrate our energy, and streamline operations to ensure the financial health of Zalora.”

Zalora promised to assist laid-off staff members in their offboarding but is yet to provide specific details about its transition support.

The company’s Supplier Code of Conduct and general labour policies, however, point to its commitment to the fair treatment of workers, including the timely payment of wages and the provision of legally mandated benefits. This may extend to severance or termination compensation as per applicable laws.

While these documents do not explicitly outline post-layoff support, they indicate a framework of respect and support for employees’ rights during employment changes.

Tough market conditions for online retailers

The fashion marketplace has built its presence across the region, particularly in Malaysia where the company maintains a large warehouse and operations hub, according to DealStreetAsia.

More than a few ecommerce groups have sprung up in Southeast Asia, with the likes of Shopee, Lazada, TikTok Shop, Love Bonito, HijUp, Pomelo and Shein fighting for market share.

Zalora belongs to a global network of fashion retailers under Global Fashion Group (GFG), which also operates in Australia and Latin America.

Since entering Southeast Asia in 2012, Zalora has struggled to gain a foothold in the region, eventually retrenching the majority of its marketing team in Singapore before relocating marketing operations to Kuala Lumpur.

The company also shuttered its business in Thailand and Vietnam to concentrate on its core markets of Malaysia, Singapore, the Philippines, Indonesia, Hong Kong and Taiwan.

Despite strong revenue growth in 2023 – increasing to US$46.23 million from $31.32 million in 2022 – Zalora grappled with profitability and registered losses of $10.83 million in profit before interest and tax.

Meanwhile, profit before tax from continuing operations fell to negative $14.17 million in 2023. Data from GFG also showed the number of active customers declining 18.6% year-on-year to 8.8 million, while the number of orders fell 23.1% to 20.8 million. This reflects a subdued demand environment, lower order volumes, and ongoing cost management efforts.

Zalora and GFG have focused on expanding platform services and improving profitability, aiming for adjusted EBITDA breakeven in 2024.

Overall, the company is navigating a tough market with shrinking sales volumes but some margin stabilisation and cost control progress.

Layoffs in ecommerce in Southeast Asia

Zalora is far from being the only online marketplace to reduce headcount in Southeast Asia amid financial woes.

In September last year, Shein terminated more than two dozen staff members in its Singapore office, purportedly to “drive efficiency,” People Matters reported.

Despite the staff cuts, Shein said it would still continue plans of ramping up operations in the city state.

Then, in November 2024, Shopee parent company Sea also slashed some 500 full-time and contract jobs at Shopee’s Indonesia-based customer service division.