Zapp axes 90% of staff in battle to slash costs

Staff numbers at the London-based rapid grocery delivery startup Zapp were slashed dramatically in 2023 as part of a slew of cost-cutting measures. 

The average monthly number of staff for the year dropped from 2,417 in 2022 to 260, with layoffs affecting the head office and across its stores and distribution centres, company filings show. Much of the office headcount reduction was a result of the company withdrawing from international markets.

Zapp’s heavy losses in 2022, in line with the rest of the rapid grocery delivery industry at the time, prompted a number of operational changes. 

The group pulled out of the Netherlands and France to solely operate in London and made heavy reductions in staff count. 

Staff costs dropped from £51m last year to £8.6m as the company sought to focus efforts on a smaller network of stores in affluent areas. 

“In 2022 we reduced our operations in a number of international markets so we could focus on our core London offer,” a Zapp spokesperson told UKTN.

The company has credited its improved performance in 2023 to this decision.

In its latest accounts, Quick Commerce, which operates as Zapp reported a pre-tax loss for 2023 of £23m, down three-quarters from 2022’s loss of £91.9m. 

The significant reduction in losses was partially down to revenue, which jumped 37% to £39.5m, however, the progress towards profitability was mostly driven by major spending cuts. 

The startup hopes to survive where competitors have failed – including Getir, which pulled out of Britain and the rest of the world to exclusively serve its home market of Turkey this year – by emphasising larger purchases of expensive products for wealthy customers. 

Changes to the supply chain and delivery network have also, according to Zapp, made the group “profitable at store level”, with confidence from the directors that full-year profits will be coming soon. 

Referring to its operating loss of £16m, the company said it expects its cash flow to sustain itself for the next year, however, has warned of a “severe but theoretically plausible downside scenario” in which it will need to seek additional funding. 

Zapp raised $200m in a Series B round in 2022 led by Lightspeed, 468 Capital and BroadLight Capital and featuring Formula One driver Lewis Hamilton. The company had raised $100m just one year prior for its Series A round. 

Read more: Getir lost £168m before UK exit, 2022 accounts show