Ensogo’s already disappointing year has taken a turn for the worse. Today it announced it’s shutting down all business units in Southeast Asia and laying off staff.
“Ensogo Australia […] will no longer provide financial support to its subsidiary Southeast Asian flash sales and marketplace business units. These business units will be shut down. All staff have been informed and communications will be made to customers in the coming days,” it said in a statement sent to Tech in Asia.
The company’s co-founder Kris Marszalek has also quit his CEO post.
“This decisions have been made to preserve the company’s cash for new investment opportunities,” Ensogo continued.
The company, which is listed on the Australian Securities Exchange, made the same announcements to the bourse. It asked for its stock to be placed under voluntary trading suspension immediately to stem further selloffs. (Click here and here for the company’s disclosures.) Trading in the stock was halted on June 17 pending the announcements and was due to resume today.
Formerly known as iBuy, Ensogo owns a network of ecommerce websites in Hong Kong, Singapore, Malaysia, the Philippines, Indonesia, and Thailand. It was founded by entrepreneur Patrick Grove of Catcha Group, who also established online businesses iProperty and iCar.
Today’s announcement is the latest in a string of bad news for the company, which has been struggling to shake off its past.
Ensogo launched as a daily deals website around 2010. Then in late 2015, it began to transition to what it called a “game-changing” shift for the business – a mobile marketplace.
Daily deals are a type of online sales that Groupon popularized but eventually fizzled out. The relaunched Ensogo and its marketplace formed part of its effort to transform into a full-blown ecommerce company focusing on product retailing – much like Alibaba’s Taobao.
In Southeast Asia, Ensogo’s main rival is Lazada, which is now owned by – guess who – Alibaba.
With Lazada and its ilk already established as popular marketplaces, the challenge for Ensogo is to convince merchants and shoppers alike to give it a shot.
It didn’t help that the company was hit by merchant complaints about delayed payments early this year.
Ensogo blamed the delay on its decision to centralize operations in Singapore and cut its headcount to reduce its cash burn rate. The company reported in April that it laid off half of its staff to under 300 from 600 at the start of the year.
An earlier report sent to the ASX showed the company recorded A$22.6 million (US$16.8 million) in receipts from customers for the quarter ended March 31. Taking into account all the company’s costs and expenses, plus cash it had at the beginning of the year, its total cash at hand stood at only A$17.6 million (US$13.2 million). That meant if it failed to stem its losses, and if it didn’t raise additional money or trim costs, it could run out of cash before the year ends. – Rappler.com