In a strategic move to cut costs, Zapp has significantly reduced its workforce by 90% in 2023, highlighting the challenges faced by the rapid grocery delivery industry.
- The company’s pre-tax losses were slashed from £91.9m in 2022 to £23m in 2023, marking a substantial financial improvement.
- Despite an increase in revenue by 37% to £39.5m, the cost-cutting measures were the primary driver of reduced losses.
- Zapp has pulled out of international markets, choosing to focus solely on London and affluent areas.
- Future profitability is anticipated, although the company acknowledges potential financial hurdles ahead.
Zapp, a London-based rapid grocery delivery startup, has drastically reduced its workforce as part of a comprehensive cost-cutting strategy. The average monthly employment figures decreased from 2,417 in 2022 to just 260 in 2023. These drastic layoffs affected both headquarters and various distribution centres, as evidenced by recent company filings.
The company reported a significant reduction in pre-tax losses, falling from £91.9m in 2022 to £23m in 2023. This improvement is partly attributed to a revenue increase of 37%, reaching £39.5m. However, the primary factor in this financial turnaround is attributed to stringent cost reductions across the board.
In response to challenging market conditions and heavy losses similar to other companies in the rapid grocery delivery sector, Zapp has realigned its operational focus. The company has exited the Netherlands and France, opting to concentrate exclusively on the London market. Furthermore, Zapp has strategically reduced its store network to target affluent areas and consumers willing to purchase premium products.
The company has made changes to its supply chain and delivery network, which it claims have led to store-level profitability. Despite this progress, the directors remain cautious, recognising the possibility of requiring additional funding if certain adverse conditions arise.
Zapp successfully raised $200m in a Series B funding round in 2022, supported by major investors including Lightspeed, 468 Capital, BroadLight Capital, and notable figure Lewis Hamilton. Previously, the company had raised $100m in its Series A round.
Zapp’s strategic cost reduction and market focus could pave the way for future profitability, albeit amidst acknowledged financial contingencies.
