Digikala, a carbon copy of Amazon in Iran and one of the country's leading startups, in an open letter to employees announced that while the company has been forced to lay off 175 people, it will adopt strategies that will help it maneuver the firm out of economic hardships.
Company founders Hamid and Saeed Mohammadi pointed to the poor economic conditions as the reason for the downsize, and described the dismissal of 175 employees as one of the toughest decisions they ever had to make, but stressed that it is necessary for sustaining the business as a whole. News website ITIran published a copy of the letter.
Enumerating three of the major causes for the company's decision, the letter reads, "With the jump in the dollar exchange rate, the public's purchasing power has dwindled, leaving an impact on sales of certain product categories."
To Digikala, the second main reason behind the downsizing is the disruption in the supply of products, arising from importers' inability to procure commodities.
The last reason referred to in the letter is defective and impulsive economic strategies adopted by the government which have hampered imports leading to widespread confusion in many markets.
Digikala is one among many of the companies and factories in recent months which were compelled to scale down human resources to cut costs and maintain profitability.
>Built to Last
In the open letter, Digikala directors have tried to maintain a positive stance on the future of the business.
The e-commerce company said they are adhering "Built to Last" principles to ensure their success despite economic uncertainties.
Built to Last is the name of one of the most influential business books written in our times, and is the result of a six-year research project into what makes great companies by examining the characteristics of visionary companies based on stories and research data. Seemingly, Digikala has based their current strategy on this influential business book.
The online retailer will also provide support packages for the dismissed employees so as to give them a peace of mind until they can find another job.
Digikala believes the marketplace strategy which they have worked out is one of best solutions for the country in the current circumstances in which the retail trade has been thwarted.
>Roots
Following US President Donald Trump's withdrawal from the historic 2015 Iran nuclear deal, the USD rate hit unprecedented highs against the Rial currency and prompted the government of President Hassan Rouhani to unify the rate at 42,000 rials.
Furthermore, the government established an online system for businesses to announce their currency needs and be allocated subsidized currency. The system proved dysfunctional over time as the imposed cap on the dollar exchange rate pushed up its value to higher levels.
The government's micromanagement approach to imports bottlenecked supply and in most cases put a full stop to the entry of commodities into Iran. The subsequent shortage of products only made the situation worse.
As of August, the country has been subject to the first round of US sanctions, with the second phase beginning in November, targeting Iran's main source of income, namely oil revenues.
>Company's Story
Digikala is an online marketplace, a secure and transactional website where selected suppliers can sell their products or services to buyers. Buyers' transactions are processed by a marketplace operator and usually delivered by the supplier.
The last part of the open letter is a review of the Digikala's path to success in the past 12 years.
Digikala's story began 12 years ago when two brothers, Hamid and Saeed Mohammadi, were looking for a digital SLR camera in Tehran's electronics bazaar, at the Hafez and Jomhouri junction. The camera body was new but its lens turned out to be second hand, leading the two Mohammadi brothers to start Digikala from a small two-room apartment in central Tehran.
"We built this company from scratch, promoted entrepreneurship in the country and paved the way for other startups, and managed to create thousands of direct and tens of thousands of indirect employment opportunities."
"We extended our products from gadgets to include more categories, established a large order processing system and expanded our horizons by forming Digistyle [which offers clothing items]."
"We added Fidibo [locally made e-book reader] to our products to promote book readership, and this year we will initiate DigiPay and create an online grocery store."
DigiPay will mark Digikala's entrance to the fintech sector and rid customers of having to insert their bank account information into the website every time they make a purchase.
