Ensogo, the e-commerce startup with operations in and around the region, has announced a massive round of layoffs as a move to centralise its operations and stem spiraling losses.
Its 2015 financial records show that the company, which is listed in Australia, recorded a huge loss of 79.8 million AUD (RM235.4 million), significantly larger than its 2014 losses of 67.4 million AUD (RM198.8 million).
What’s worse, its cash reserves now stand at 17.6 million AUD (RM51.9 million) – at this rate the company will not be sustainable even until the end the year.
The company has evolved from a group-buying and daily deals website to a more traditional B2C marketplace starting this year, but even that has not stopped Ensogo from bleeding cash.
News began flowing two weeks ago that the company quietly shut down its Malaysia head office in Kuala Lumpur, and that some merchants were not getting paid despite the site still running and accepting payment transactions. Some of them have even opened a Facebook group to share information.
The site’s Facebook page still runs normally (with plenty of comments hidden in its posts), while its customer service team responds within a day on Facebook message. Its daily EDMs are also still being sent out.
In a report by Tech In Asia, the company admitted that some late payments were made to several merchants, and that all outstanding payments will be issued in due course. The reason behind it was due in part of the “centralisation” process, one that took 75% of its Malaysia office – the Malaysia team now stands at just five, from 20 at the start of the year.
This “centralisation” process, where the core business will operate mainly from its Singapore headquarters, also involves another major change in Ensogo’s playbook: charging a 15% fee for all transactions made at the mobile marketplace, and crucially, Ensogo no longer accepts local merchants – all of Ensogo’s merchants will now operate from China and South Korea, and will ship globally.
This 15% fee was introduced to its China merchants in January, while other merchants were charged from April.
Ensogo CEO Krzysztof Marszalek recently told Digital News Asia that the new strategy will allow Ensogo to serve orders to over 50 countries globally, a much larger pool than the previous regional platform, something Marszalek claims will be “a game changer” for Ensogo.
In some ways, that’s proving to be true: “We went from 1,000 sellers in Q3 2015 to 13,599 in Q1 2016, while products on sale went from 77,268 at end-Q4 2015 to 4.27 million at the end of Q1 2016,” Marszalek explained to DNA.
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