KENYA – Copia Kenya, an e-commerce platform, has announced plans to lay off up to 1,060 employees due to financial constraints and inadequate capitalization to sustain operations.
The news was communicated to all staff members via a memo, which included a month’s notice for the affected employees.
Copia joins the ranks of other food startup platforms like Kune Food and Twiga Foods, which have also faced financial difficulties and have had to lay off significant portions of their workforce due to insufficient capital and operational losses.
Despite the company’s efforts to find alternative revenue streams, the current financial situation necessitates this retrenchment.
“In light of our persistent financial challenges and despite our best efforts to explore avenues for additional funding, we find ourselves compelled to undertake a comprehensive organizational restructuring to ensure the sustainability of our operations, or even consider the possibility of shutting down,” the statement read.
Copia operates a distribution model for durable fast-moving consumer goods (FMCG) through registered agents who earn a commission.
The startup aimed to revolutionize the retail market by reducing costs associated with operating traditional corner shops, attracting a customer base of middle to low-income earners.
However, Copia faces stiff competition from supermarket chains expanding across Kenya. Additionally, many low-income earners prefer small shops where they can purchase goods on credit.
The economic downturn experienced in 2023 forced many low-income earners to cut back on spending and increase their reliance on credit, leading to reduced profits and increased expenses for Copia. Furthermore, constraints in the capital markets have limited the company’s access to necessary funds.
This latest announcement is not Copia’s first attempt at workforce restructuring due to financial constraints.
In 2023, the company laid off 350 of its 1,800 employees. The decision to lay off up to 1,060 employees follows the closure of Copia’s sister firm in Uganda, which also cited limited access to capital and a challenging economic environment.
Analysts and market experts remain skeptical about whether this move will be sufficient to resolve the company’s financial issues and prevent its closure.
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