Officially bankrupt and liquidated! Another e-commerce platform collapsed

Another home furnishing e-commerce platform closed down and went bankrupt. In the post-epidemic era, the internal competition in the home furnishing category seems to be more fierce, and many home furnishing giants are going bankrupt. Under the new global consumption trend, sellers in this category may have to change their product sales and operation ideas if they want to break through the siege.

Home furnishing e-commerce platform Brosa officially goes bankrupt and liquidates

Recently, creditors of Brosa, an Australian home furnishing e-commerce platform, voted to close the company and officially enter bankruptcy liquidation. The company was once known as Australia's largest online retailer.

The bankruptcy of this platform has been hinted for a long time. On December 14 last year, Brosa announced that it had entered bankruptcy management procedures. It is worth noting that entering bankruptcy procedures does not necessarily mean bankruptcy. If someone acquires it, the company may still survive.

At that time, the platform had a debt of up to A$24 million, including A$10 million in unfulfilled orders. However, due to its good performance in the early stage, more than 30 companies participated in the asset bidding, hoping to "take it in".

On December 21, Brosa was finally acquired by Australian e-commerce platform Kogan at a low price of 1.5 million Australian dollars. Kogan is a listed e-commerce company founded in 2006, selling a variety of products including consumer electronics, electrical appliances, household items, hardware, toys, etc.

After the acquisition, Kogan promised to clean up Brosa's mess and provide logistics support for customers with undelivered orders left before its bankruptcy. According to people familiar with the matter, these undelivered orders involved more than 5,000 customers.

A Kogan spokesperson said: "At that time, approximately 5290 customers had paid for goods that were not delivered. Of these, approximately 2500 orders were stored in warehouses and Kogan will process these orders and deliver the goods to customers. The remaining 2790 customers' purchased goods have not been stored and the prospects of receiving the goods or a refund are not optimistic."

Customers who paid but did not receive the goods will definitely cause dissatisfaction. Customer Kylie Phelan bought a three-seater sofa for $2,307 last November. After paying the money, the administrator contacted her in January to inform her that Brosa was bankrupt, making her an unsecured creditor. Phelan tried to contact the platform many times but received no response.

Many customers complained on social media that Brosa was irresponsible. One customer was very angry: "I spent more than 2,000 Australian dollars but didn't receive the sofa. The product I bought was out of stock and the possibility of receiving a refund was slim. No one cared about our interests."

It is understood Kogan intends to restart the business after taking over and will not be concerned about Brosa's debts.

Brosa's past glory: it received two rounds of financing in a short period of time

Brosa was once a star e-commerce platform. It was founded in Melbourne in 2014 by Chinese Ivan Lim, David Wei and Richard Li. It mainly focuses on light luxury home products. From design and development to production and transportation, all processes are completed internally by the team, and the overall product pricing is relatively high.

Perhaps due to its accurate customer positioning, the platform quickly entered the fast lane of development shortly after its establishment. In the second year of its establishment, Brosa received a $2 million Series A financing from AirTree Ventures, and in 2017, it received another $5 million Series B financing led by Bailador Technology Investments, AirTree Ventures and BMY Group.

It is an impressive achievement to obtain two rounds of financing in a short period of time. After the financing, Brosa has been moving forward steadily.

What really caused Brosa to explode again was the epidemic. At the beginning of the epidemic, global consumers' demand for home products soared, and Brosa was one of the many beneficiaries, and its scale quickly expanded by 2 times. Perhaps it was too optimistic about the market environment. When the offline real economy recovered, Brosa failed to adjust its policies in time, and its sales performance began to plummet.

Australia's overall consumption situation is not optimistic in 2022. Data shows that the country's online purchases fell 13.9% month-on-month in December, and online sales of home gardening fell 17% month-on-month, down 6.2% year-on-year from 2021.

Brosa tried to clear out its inventory to save itself, but its sincerity in clearing out its inventory was not great. Unlike some Amazon sellers who offer clearance sales that are equivalent to giving away products for free, many of Brosa's products are only 30% off, which is not as big as the discounts offered by some sellers. Therefore, Brosa's inventory clearance failed to save its performance. The company fell into crisis and was unable to sustain itself, and eventually went bankrupt.

Home furnishing industry is in a state of internal competition, and consumers tend to buy low-priced products

In fact, like Brosa, many giants were also very optimistic about the online market at the beginning of the epidemic. Amazon, Walmart and other giants prepared large quantities of goods. When the epidemic was compounded by inflation, global consumers reduced their spending on non-essential items, and multiple categories such as clothing, household goods, and 3C electronic products were greatly impacted.

Before the inflation, retailers such as Walmart and Target were optimistic about the consumer market after the epidemic eased. Unexpectedly, the opposite happened. The large amount of stockpiled inventory became an operating burden. These retailers drastically cut prices to deal with products, on the one hand to speed up payment collection, and on the other hand to free up warehouse space. Although this will deal a severe blow to their profits in the short term, it is in line with long-term development needs.

Brosa , which made the same mistake and used the same method to save itself, was not so lucky. This may be due to the influence of its own products. When global consumption is down, more people tend to buy some daily necessities and high-cost-effective products. Brosa's products are mainly light luxury, with a high overall customer unit price. In addition, its marketing did not keep up with consumer trends, which made it difficult to recover its performance.

In fact, at the beginning of the epidemic, many cross-border e-commerce sellers were also blindly optimistic about the market and stocked up a lot of goods. As a result, the inventory was difficult to digest, and they could only clear the goods at ultra-low prices. This invisibly lowered profits and accelerated the internal competition among sellers.

In the face of fierce competition, home furnishing sellers are most affected. According to industry insiders, the home furnishing category is a category with serious internal competition. Judging from the situation on Amazon, almost all of the big sellers when they first entered the market have changed.

On January 10, the latest financial report released by 3B Home Furnishing, a US home furnishings retail giant, estimated a quarterly loss of US$393 million, and 3B Home Furnishing may go bankrupt; in December last year, United Furniture Industries, the parent company of Amazon home furnishings giant Lane Home Furnishings, suddenly announced a permanent closure, and all 2,700 employees were laid off; in July last year, US home furnishings retailer Altmeyer Home Stores filed for bankruptcy liquidation with the court...

Too many home furnishing giants have fallen into bankruptcy, and Brosa is just one of them. However, the home furnishing industry has not entered a cold winter. According to data released by the U.S. Department of Commerce, sales of furniture and home furnishings in the United States in June last year increased by 1.4% compared with May, and increased by 4.6% compared with the same period last year. Overall sales in the first half of 2022 increased by 2.9%.

A survey of the top ten home furnishing retailers by Deliveright, a US logistics platform , found that sales of most sellers continued to grow. Although home furnishing sellers face many challenges, the demand for home furnishing products remains high. One thing worth noting is that US consumers tend to buy low-priced home furnishing products.

For home furnishing sellers who do not want to be kicked out of the competition, perhaps it is time to change their product and marketing ideas.

Home

Bankruptcy