It’s hard! Another e-commerce platform declared bankruptcy

It seems that the collapse of e-commerce platforms this year is nothing new.

There is only about half a month left until the end of 2022, but some e-commerce platforms cannot even survive this half month, and even declare bankruptcy before the Christmas peak season, ending the platform's history at the end of 2022.

Brosa announces bankruptcy proceedings, website liquidation cuts

Recently, Brosa, an Australia-based fashion furniture and home decoration e -commerce platform, announced that it had entered Voluntary Administration ( a bankruptcy procedure in which a company is voluntarily taken over).

In 2014 , Brosa was born in Melbourne . This online furniture and home decoration platform co-founded by Chinese Ivan Lim, David Wei and Richard Li has been favored by capital and consumers in the years that followed .

At the beginning of its founding, Brosa said that the company was " born out of dissatisfaction with the status quo and the desire to make the furniture industry better . " The founder did not believe that high-end furniture had to be priced high, and Brosa " excluded importers, wholesalers and high-end stores and chose a completely internal team to manage the Brosa brand . "

In the second year of its establishment, Brosa, which focuses on light luxury home products, received a US$2 million Series A financing from AirTree Ventures . In 2017 , it received another US$5 million Series B financing led by Bailador Technology Investments, AirTree Ventures and BMY Group .

During the epidemic lockdown, consumers who were confined to their homes had higher demands for their home environment, so they spent huge amounts of money to change the original interior decoration style, resulting in a surge in online shopping for home products. Brosa also grew rapidly under this impetus .

Taking advantage of the pandemic, Brosa tripled in size. By early 2021, Brosa's e-commerce business had expanded to Melbourne and Sydney.

But the good times did not last long. As the epidemic situation gradually eased, the offline real economy began to recover, and the current global consumer market fell into a downturn . Brosa failed to make correct strategic adjustments to the market in a timely manner, sales fell sharply, and overall business development faced huge obstacles.

It is reported that in order to clear out the backlog of inventory and solve the short-term cash flow pressure , the Brosa website is conducting a " bankruptcy sale ", and this activity may last until the Christmas period .

However, the editor noticed that although the Brosa website advertises " discounted " prices , the discounts on many products are not very large. The highest discount is shown as " Over 60 % off ", but it is only for a small number of products. The discount for most products is shown as " Over 30% off ", and the prices of some of Brosa's main products are still high . In short, the overall price of products on the website has not dropped much , and there is no sense of "selling off to make up for the cost" or quickly recovering cash flow . The " clearance sale " is more like a self-help gimmick .

Brosa has announced the appointment of Richard Tucker and Michael Korda of KordaMentha as voluntary administrators after declaring bankruptcy . Note that bankruptcy does not necessarily mean bankruptcy, and the company can still survive if someone buys it .

It is understood Brosa has seen a surge in interest from potential buyers since entering administration . Tucker said more than 30 approaches had been made in the two days after the appointment of administrators , with buyers particularly interested in Brosa's online expertise and unique customer base.

Many Australian companies reported that the situation in 2022 was worse than in 2021. The ABS Business Conditions Report also revealed a similar bleak picture, with one-third of Australian companies having difficulty finding employees, nearly half of companies reporting increased operating expenses, and more than two-fifths facing supply chain disruptions , especially in the online market, which was the first to be affected. But this cold wind is not just blowing in Australia.

Unable to sustain, the "bankruptcy wave" of e-commerce platforms continues

Since the beginning of this year, the current situation of the home furnishing market seems to be worse than any other category, and many home furnishing e-commerce companies have gone bankrupt.

One year after its listing, its market value plummeted by 93%, shrinking from 775 million pounds to 2 million pounds . Therefore, in November, Made.com, a British home furnishing e-commerce platform founded by Chinese and listed only a year ago , declared bankruptcy. Subsequently, British retailer Next announced that it would acquire Made.com for 3.4 million pounds.

In the home furnishing e-commerce market , it is not just Made.com. Other European home furnishing e-commerce companies, including Eve Sleep, which was established eight years ago, have also declared bankruptcy and liquidation due to continued losses and inability to operate . Its related brands, websites and assets have been acquired by another bedding retailer, Bensons for Beds.

At the same time, the performance of other home furnishing e-commerce companies also took a sharp turn for the worse. The share price of German home furnishing and furniture e-commerce Home24 fell 80% in a year. It also announced that it had decided to sell its business because it was unable to cope with the decline in sales.

In the United States, many old and large-brand home furnishing retailers with decades of history were unable to survive the cold winter.

There is an "American version of IKEA" Bed   Bath & Beyond lost $358 million in the first quarter of this year alone, with sales down 25%. As a result, it decided to lay off 6,000 employees and close 150 stores . It also sought a loan of nearly $380 million to solve various operational problems such as cash flow. However, some analysts have predicted that the company may declare bankruptcy in the next few months .

In July this year, Altmeyer Home Stores, a long-established American home furnishings retailer that had survived market turmoil for 81 years, filed for bankruptcy liquidation with the court .

In September this year , Tru-Wood Cabinet Company, a member of the American Cabinet Makers Association and a well-known American cabinet manufacturer with a 50-year operating history, announced that it would cease operations and lay off all employees.

In November this year , United Furniture Industries, an American home furnishing giant and the parent company of Amazon's home furnishing brand Lane Home Furnishings, suddenly announced its permanent closure and sent layoff notices to 2,700 employees late at night .

Even Wayfair , the American home furnishing e-commerce giant, is having a hard time, with its business continuing to be sluggish .

Wayfair 's 2022 Q3 financial report showed that its net income fell 9% year-on-year to $2.8 billion , operating losses swelled from $70 million last year to $372 million, and net losses increased from $78 million to $283 million. Wayfair's market value has shrunk by 83% this year .

The continued procurement difficulties and unabated inflation , as well as the continuous reduction in orders under various high pressures, have led to the company's declining profitability and made it unsustainable, forcing it to file for bankruptcy.

In fact, it is not just home furnishing e-commerce platforms that are frequently going bankrupt and shutting down. Many platforms have announced their closures since the beginning of this year.

Awok.com, an e-commerce platform founded in 2013 , announced its closure in September this year. It once had more than 10 million monthly visitors and offered about 300,000 products. It also completed its first round of financing worth US$30 million in April last year .

Tophatte, an American flash-sale e-commerce platform founded in 2012, also announced its closure in November .

Domestic giants’ overseas platforms have also encountered setbacks . If Yooou , which was launched in March this year , was reported to have been shut down in August, and Joybuy, a cross-border e-commerce platform under JD.com, also announced in November that it would stop operating again.

Brand bankruptcy , e-commerce business closures , employee layoffs , and asset sales have become common news in the cross-border e-commerce field this year. However, it is a difficult problem for the cross-border sellers who are still holding on to stay stable amid wave after wave of shocks.

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