Twiga Responds to Economic Challenges with Strategic Layoffs and Logistics Marketplace

In the face of macroeconomic challenges that have affected the ability to raise capital and prompted venture-backed companies to recalibrate their operations, Kenyan B2B e-commerce platform Twiga is taking strategic steps to ensure its viability. The company has announced its intention to undergo another round of layoffs, affecting 33% of its workforce, a total of 283 employees. This initiative aims to transform Twiga into a lean, agile, and cost-effective organization.

Twiga’s latest operational adjustments involve eliminating its in-house delivery system, which relied on leased trucks. Instead, the company will hire contractors on a per-use basis. To facilitate this change, Twiga has introduced a logistics marketplace that extends its delivery services to independent truckers. By utilizing a route-to-market tool within this marketplace, the company expects to reduce its logistics costs by a substantial 40%.

This move isn’t the first time Twiga has restructured its operations to adapt to evolving circumstances. Earlier, it dismissed its sales team in favor of commission-based agents. Twiga is also streamlining its distribution centers, closing down 10 of them in Nairobi and centralizing its operations in a modern 200,000-square-foot warehouse that was inaugurated last year.

Twiga’s products, such as the Soko Yetu platform and Twiga Fresh, its flagship fresh-produce venture, have been geared towards addressing challenges in traceability, stock shortages, and price fluctuations within the market.

Twiga’s Co-founder and CEO, Peter Njonjo, shared insights into these changes: “Twiga Foods Limited operations are still up and running. However, based on recent corporate fine-tuning processes, Twiga has taken several interventions to optimize its operations and enhance operating efficiencies.”

These changes are also in response to a shifting landscape marked by customers’ diminishing purchasing power. The company acknowledges that its Western Kenya operations are ongoing, though it is working to refine and optimize its services in the region.

The decision to implement these changes, as noted by Njonjo, stems from the significant changes in the macroeconomic environment over the past two years. The cost of capital has surged for venture-backed startups, necessitating the restructuring of business models to ensure sustainability in this challenging context.

Twiga, backed by investors such as Creadev, TLcom Capital, IFC Ventures, DOB Equity, and Goldman Sachs’ spinoff Juven, is emblematic of a larger trend among startups worldwide. As access to venture capital funding becomes constrained, these companies are compelled to transform their strategies and reshape their operational paradigms to thrive in a complex and rapidly evolving financial landscape. The adaptive measures undertaken by Twiga stand as a testament to the resilience and innovative spirit inherent in the startup ecosystem.