Cashback and rewards platform ShopBack has laid off 24 per cent of its workforce or 195 roles “to become more focused and self-sustainable as a company”. The announcement was made by co-founder and CEO Henry Chan at the Temasek-backed startup’s town hall today (Mar 19).
Those impacted by the job cuts were notified within an hour of the event’s conclusion, and the company also called off the rest of the workday. All departures were kept to the same day “out of respect and to ease transition for departing team members”, with their last in-office day as Mar 19, 2024.
“Undoubtedly, this is one of the hardest decisions I’ve had to make in our company’s history,” said Chan in his message titled On Focus and Sustainability – A Painful Decision posted on the ShopBack website.
To the ShopBackers who will be leaving us, I am truly sorry and I acknowledge the difficulties it will bring to you. We will do our best to support you through this transition with care and compassion.
– Henry Chan, ShopBack co-founder and CEO
Laid-off employees were offered pay for at least two months of their notice period, and an additional month of severance payment for every full year of service or based on local statutory guidelines, whichever is higher.
They will also receive a bonus equivalent to a month’s salary, which will be pro-rated if they are yet to complete a full year of service, as well as encashed accrued and unutilised leave days.
Additionally, all outgoing employees will have their medical insurance coverage extended and access to mental healthcare support will run until Jun 30, 2024.
These employees will also receive career transition support, which includes either CV reviews, mock interviews and access to a professional coach, or a “career transition support allowance”, which has been determined in consultation with the ShopBack’s HR department.
Meanwhile, visa holders will have their repatriation costs covered, including air fare and a budget for moving expenses to “ensure a seamless transition back home if that is the option (they) are pursuing”.
“A leaner and more agile team is needed for ShopBack’s success”
Between 2021 and early 2022 — a period when the economy favored expansion over sustainability — ShopBack scaled up its team of 550 to over 900 employees.
However, when market sentiments shifted and aggressive growth became an unsustainable long-term strategy in Q2 2022, ShopBack’s focus shifted to cost efficiency.
The company “explored and exhausted all viable alternatives to reduce costs”, including cutting back significantly on salary increments and performance bonuses, as well as implementing pay freezes. Yet, sustainable growth remained a significant challenge for the rewards platform.
Hence, the company had to “narrow its focus” over the last few months, and “identify critical and durable problem spaces to excel in over the longer term”.
It then became clear to Chan that a leaner and more agile team — significantly different from the company’s current organisational structure today — would be needed for ShopBack’s success.
I made the mistake of pursuing too many directions as a company and expanding our team too rapidly. I take full responsibility for the decisions that have led to this situation.
While these course corrections are painful, they are crucial and will set us up for success in the years to come. Because of this, we will be able to grow sustainably moving forward.
– Henry Chan, ShopBack co-founder and CEO
The company reported a 20 per cent decline in its revenue for FY2022/23
Shopback’s announcement comes a month after the company reported a 20 per cent year-on-year decline in its revenue to US$87.7 million for the financial year ended March 2023.
Its voucher revenue fell by more than half, and the company’s losses before tax widened by 29 per cent year-on-year as one-off employee and M&A expenses affected growth.
Earlier this month, the company announced it would be discontinuing its buy now, pay later (BNPL) service, PayLater, from Mar 22 following a periodic review of its business units.
The company first rolled out the PayLater service to Singapore and Malaysia in 2022 after acquiring BNPL player Hoolah the previous year.
Featured Image Credit: ShopBack