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-By Ankita Dutta

The CEO of Meesho, Vidit Aatrey, notified the company’s staff via email about the layoffs
and assured them that any affected employees are entitled to an additional month’s
severance pay on top of the required notice period. They are also eligible for employee
stock ownership plans (ESOPs) regardless of the duration of their service with the firm.

Indian e-commerce firm Meesho has laid off 251 employees, or 15% of its workforce, as
part of its cost-cutting efforts aimed at achieving profitability. In an internal email to staff,
Vidit Aatrey, the company’s founder and CEO, said the cost-cutting measures had been
necessary after a change in the macro climate, which forced the company to accelerate its
plans to profitability. Affected staff members will be given an extra month’s severance pay
and employee stock ownership plans (ESOPs) irrespective of their length of service,
according to Aatrey.

Meesho, which has grown 10 times between 2020 and 2022, is nearing zero cash burn and
moving towards EBITDA breakeven, its CEO had told Jefferies in a recent report. That report
said the company was already contribution-margin positive and had managed to cut its
marketing and indirect expenditures. 

A company spokesperson confirmed that the redundancies were aimed at creating a leaner
organisational structure to achieve sustained profitability. The spokesperson expressed
gratitude for the contributions made by the laid-off employees in building Meesho.
E-commerce firms have grown rapidly over the past few years in India, drawing
in significant investment. However, amid the pandemic, many have had to tune down their
infrastructures. For example, SoftBank-backed online retailer Snapdeal is expected to cut its
workforce to enable it to survive after its merger with rival Flipkart collapsed in 2017.
Meanwhile, Amazon, which recently launched an online fashion store, has been forced to
slow its expansion plans in the country due to new e-commerce regulations aimed at
protecting consumers. Other big hitters in the space, like Flipkart and Paytm, have suffered
as a result of deep discounting tactics. 

Despite these setbacks, e-commerce growth in India is projected to rise to $100bn by 2020.
The private equity market is expected to play an increasing role in the consolidation of
India’s e-commerce space, with Snapdeal at the forefront, following its $500m funding
round in 2015 via SoftBank and Alibaba.