Copia, a Kenyan e-commerce platform serving low to middle-income customers through a network of agents, has warned that it could fire up to 1,060 workers due to lack of new capital needed to sustain its operations.
The startup is the latest to fall in trouble, joining others like Twiga Foods and Kune Food that laid off all or a substantial part of their workforce amid losses and inability to raise additional capital.
Copia Kenya’s chief executive Tim Steel said in a May 16, 2024 redundancy letter to workers on Friday that affected employees will go home after a month in line with the required notice period.
“As you are aware, Copia has been suffering financial constraints for some time. Despite our best efforts to navigate this challenge and explore avenues for additional funding, we find ourselves in a position where we must consider a far-reaching organizational restructuring to ensure the sustainability of our operations or even possible shutting down of our operations,” the letter reads.
“If the company implements a restructuring, about 1,060 roles could be eliminated from the company's structure and the services of the holders of those positions could become superfluous and their employment could consequently be terminated on account of redundancy.”
Copia was founded in 2013 by Tracey Turner and Jonathan Lewis.
The e-commerce firm runs a model of distributing durable and fast-moving consumer goods including flour and soap through agents who earn a commission.
A customer places an order online on Copia’s platform or through a nearby agent and pays using mobile money or cash. The e-commerce firm receives the order and makes the delivery in two to four days.
The customer collects the goods at the local agent.
The company had hoped to revolutionize the retail market by taking away some of the costs associated with operating corner shops such as holding inventory that can take days to weeks to sell.
Copia however faces stiff competition from supermarkets that have spread to most parts of the country, offering a wide variety of goods that a customer can buy instantly.
Most low-income households also prefer the traditional small shops where they frequently buy goods on credit.
Copia is planning to send home workers in Kenya after it parted ways with 350 of its 1,800 workers in July 2023.
The company said then that the economic downturn and the constrained capital markets had forced it to undergo a restructuring of its operations.
The trouble in Kenya comes soon after its sister firm in Uganda closed down in April last year, citing an unfavourable economic environment and limited access to capital.
The parent firm Copia Global said last year that it had suspended its African expansion. Many tech-enabled businesses in Africa have struggled to progress to profitability, burning billions of shillings raised mostly from foreign investors including American venture capital firms.
