Primer is a popular magazine in the United Kingdom. Last year, a startup founded by Braintree and PayPal veterans raised $50 million at a $425 million valuation from investors including ICONIQ, Accel, Balderton Capital, and Seedcamp. This funding round coincided with a period of unprecedented online purchasing activity in the midst of the Covid-19 pandemic. This flurry of activity has died down this year, and so have things at this up-and-coming online retailer. Primer has let off a large portion of its workforce as part of a restructure to adapt to the present market and increase its runway in preparation for what many anticipate will be a challenging year.
According to our sources, around one-third of the firm, or 85 employees, have been laid off.
A representative stated, “We can confirm that we did have a decrease in employees.” “Given the current economic climate, we, like many other companies, have made adjustments as we move into the new year, and we have taken what we believe to be prudent actions to account for the uncertain times ahead.”
It’s important to lay out the background of this situation, as it’s likely affecting several startups (and perhaps larger enterprises) in the same sector.
With the height of the Covid-19 epidemic over and the acute response of masking, social distance, and avoiding crowded physical venues having worn off, the overall e-commerce market has witnessed a significant reduction in activity this year. A lot of people thought that once people started shopping online in significant numbers, they’d “never go back,” so to speak, to the traditional methods..
That hasn’t come to pass; instead, consumers are returning to brick-and-mortar establishments even as the global economy slows, inflation rises, and discretionary spending falls. Businesses that grew to satisfy consumer demand are now cutting down.
Because of this, even the largest corporations in the industry, which you might have believed would be the most resilient during economic downturns, have had to lay off workers and reorganise. For instance, Amazon foreshadowed lower-than-expected sales over the crucial holiday season in its most recent quarterly earnings report. Thousands of jobs have been eliminated, and some of the company’s most expensive product lines have been rationalised.
You may have noticed that the doom and gloom forecasts for Black Friday and the first weekend of Christmas shopping were not fulfilled. Long-term profit margins will take a blow because a big share of the recent retail activity can be attributable to deep price cuts.
The effects of this trend will be seen across the retail industry, from large-scale retailers to the various IT service companies who serve them.
Primer’s selling point is its drag-and-drop interface for building a payments stack and flow around online purchasing, which includes not only the basic transaction but potentially different payment options, adding in loyalty or discount codes, upselling to other products, managing customer information, verifying against fraud, and much more. Its support for hundreds of different services illustrates how diverse the market is.
According to Prime’s co-founder and CEO, Paul Anthony, “we are building out a comprehensive suite in the next year to help merchants with operations and the observability of the payment stack.”
A reliable source has informed us, however, that while placing an order was a breeze, really putting it into action took longer than expected.
The businesses are being signed up, but it takes a long time to get them all online. Before they go online, they will not produce any income. As a result, they have cut back on staffing until they can find a solution to this congestion.
Given the current fundraising difficulties that many companies are encountering, Primer has done what it recommends: instead of obtaining more money to prolong runway, it has reduced expenses to make the money it already has last longer. Our sources tell us that Primer’s main objective in this reorganisation is to provide the company a longer runway than two years (which it believes it has done). It plans to keep pouring resources into product development and roll out new features in that area in the coming year.
There is a case to be made, as there always is in a recession, for increased automation across the board to reduce overhead and, notably in the case of e-commerce, use more efficient technology to speed up the buying process and increase revenue. However, this will only hold true if the technology is up to snuff and the target clients can afford to put money into upgrades themselves. That’s the benefit and the pitfall of operating in any environment.
The end goal for Primer is to be counted among the benefactors (and beneficiaries) of that transformation.
“Given the challenging economic environment, we believe Primer is more valuable to merchants and partners than ever before as they look to increase efficiency within their organisations, lower costs, build greater customer loyalty, and launch in new markets – and do this in a no-code/automated fashion,” the spokesperson said. “While these are always difficult decisions to make, we feel confident this recalibration will not affect the level of service we offer to our current and prospective merchants and partners.”
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