Zapp, a rapid grocery delivery service based in London, has undergone substantial changes to address financial challenges.
- In 2023, Zapp reduced its workforce by 90%, decreasing staff from 2,417 to 260, as part of a significant cost-cutting strategy.
- The company withdrew from international markets and concentrated its efforts on affluent areas in London.
- These measures led to a 75% reduction in pre-tax losses from £91.9 million in 2022 to £23 million in 2023.
- Zapp’s revenue increased by 37%, bolstered by strategic operational changes and a focus on larger, more expensive orders.
In a drastic move to curb expenses, Zapp, the London-based rapid grocery delivery startup, reduced its workforce by 90% in 2023. This significant reduction saw the average monthly number of employees falling from 2,417 in 2022 to just 260. This downsizing affected both the head office and various store and distribution centre personnel.
Part of this workforce reduction was due to Zapp’s strategic retreat from international markets, specifically the Netherlands and France, in order to refocus its operations exclusively in London. This shift was primarily aimed at enhancing efficiency and concentrating resources on a smaller, more manageable network of stores located in affluent urban areas.
Zapp experienced a noticeable reduction in staff costs, which fell dramatically from £51 million in the previous year to £8.6 million. The company attributed this financial turnaround largely to their decision to refocus and streamline their operations within London.
The financial adjustments resulted in a substantial 75% decrease in pre-tax losses, dropping from £91.9 million in 2022 to £23 million the following year. Despite these losses, the company reported a 37% increase in revenue, climbing to £39.5 million. This uptick was driven by improvements in operational efficiency and a strategic pivot towards catering to wealthier clientele with higher-value orders.
Zapp acknowledges that while it has become “profitable at store level”, future challenges remain. The startup projects that its current cash flow will be sustainable throughout the next year, although it has warned of potential scenarios requiring further financial support. Despite these uncertainties, Zapp remains focused on achieving full-year profits soon.
Zapp’s strategic realignment has significantly reduced its financial losses, setting a promising path towards future profitability.
