Written By Dubai-based e-commerce platform Noon has announced a significant workforce reduction, cutting 10% of its employees in a bid to lower operating costs. The move follows a challenging period for the company, which has been struggling to compete with global giant Amazon in the Middle Eastern market.
The layoffs, which will affect approximately 300 employees across various departments, come as Noon faces increasing pressure to improve its financial performance. The company reported a net loss of $338 million in 2020, up from $275 million the previous year. Its revenue growth has also been sluggish, rising just 11% year on year.
Noon was founded in 2017 by Emirati entrepreneur Mohamed Alabbar, with the backing of Saudi Arabia’s Public Investment Fund, and has since grown to become one of the region’s biggest e-commerce players. The platform sells a range of products, from electronics and fashion to groceries and household items, and has attracted investment from several high-profile backers, including Emaar Properties and Al Tayyar Travel Group.
However, Noon has struggled to keep pace with Amazon, which launched in the United Arab Emirates in 2019 and has rapidly gained market share. According to research firm Statista, Amazon is projected to account for over 20% of the Middle Eastern e-commerce market in 2021, while Noon’s share is expected to be just 4.4%.
The Covid-19 pandemic has also impacted Noon’s operations, with supply chain disruptions and logistical challenges affecting its ability to fulfill orders. However, the company has responded to the crisis by launching new services, such as Noon Daily, a grocery delivery platform, and expanding its logistics infrastructure.
In a statement, Noon CEO Faraz Khalid acknowledged the difficulties the company has faced but expressed confidence in its future prospects. “Noon has a clear path to becoming the region’s leading e-commerce platform, and we will continue to invest in areas that will drive growth and improve the customer experience,” he said.
Despite the challenges, some analysts believe that Noon still has potential to succeed in the Middle Eastern market. “Noon has the benefit of local knowledge and regional expertise, which gives it an edge over global players like Amazon,” said Ahmed El Alfi, managing director of regional venture capital firm Sawari Ventures.
However, the company will need to take decisive action to address its financial performance and close the gap with its larger competitor. Cutting jobs may help to reduce costs in the short term, but Noon will also need to focus on improving operational efficiency, expanding its product range, and enhancing its customer experience to remain competitive in the long run.
