“Iran’s Amazon” lays off staff as Trump sanctions hit business

“Iran’s Amazon” lays off staff as Trump sanctions hit business
Iran’s economic difficulties mean that there are some goods Digikala cannot obtain any more even when enough consumers have the wherewithal to pay for them.
By bne IntelliNews September 4, 2018

Digikala, “Iran’s Amazon” in the making, is feeling the effects of the downturn that has struck the Iranian economy. The company is laying off 175 of its 2,400-plus-strong staff, ITIRAN reported on September 4.

Co-founded and run by the Mohammadi twin brothers, Digikala has doubled down on e-commerce in the country of 80mn in recent years, expanding its range of offers beyond its original digital line-up of goods to clothing, homewares and medical and bathroom devices. It is by far Iran’s largest online retailer of electronic and clothing goods.

Hamid and Said Mohammadi—believed by analysts to have personal fortunes of more than $100mn each—said in a letter addressed to staff that the firm faced havoc generated by the devaluation of the Iranian rial, the falling purchasing power of Iranians, supply chain problems, the drying up of imports, instability in planning and US sanctions. It is the reintroduction of heavy US sanctions that is widely viewed as the cause of the economic tailspin Iran finds itself in.

The “belt needs to be tightened for the winter”, the letter to employees of Digikala—which means “digital products” in Farsi—said.

The announcement comes following Digikala’s buyout of RocoLand, Iran’s largest online-only supermarket.

Import ban on “luxuries”
With the US offering very few concessions in its targeting of Iran with heavy sanctions and the Iranian government placing an import ban on more than 1,300 goods deemed to be “luxury” in order to curb hard currency outflows, several imports popular with middle-class Iranians are now absent from the shelves.

Iranian wags have noted that while Donald Trump may not be having much success in targeting America’s Amazon—seemingly a pet hate of the US president’s which this week exceeded a trillion dollars in value according to its growing stock market valuation—he has done a fair bit of damage already to Iran’s.

The Mohammadi twins are photography buffs who launched their business after saving a thousand dollars to buy an SLR camera, but finding it difficult to smoothly obtain in Iran.

“We spent all our money on that camera,” Hamid Mohammadi told Forbes in January 2015. “That’s how the idea came about. We wanted a website with lots of information and reviews for consumer electronics, and also a good shopping experience, beyond information and reviews. The idea was a combination of CNET and Amazon. We thought it was necessary to have both business models in Digikala because both were a very real problem for Iranians.”