Innovative startup runs out of cash; suspends Hong Kong and Thai operations.
Honestbee is freezing operations in Hong Kong and Thailand and laying off staff as it urgently seeks investment to stave off collapse.
According to an in-depth report by TechCrunch, citing multiple industry sources, the Singapore-headquartered food-delivery business turned innovative food-and-grocery retailer has nearly run out of money and is unlikely to be able to pay staff this month.
“From talking to several former and current staff, TechCrunch has come to learn that Honestbee is laying off employees, it has a range of suppliers who are owed money, it has “paused” its business in the Philippines, it has closed R&D centers in Vietnam and India, it isn’t going to make payroll in some markets and a range of executives have quit the firm in recent months,” TechCrunch reported.
However, the potential for the sale or rescue of the business is high. The company has held talks with Grab and its rival GoJek over the potential acquisition of all or part of the business.
Honestbee was founded four years ago. Its core business concept is using store pickers to shop for groceries at various food retailers, with orders completed on apps and shipped by delivery staff to consumers. It operates in Hong Kong, Taiwan, Thailand, Indonesia, the Philippines, Malaysia and Japan, as well as its home market. In suburban Singapore it has opened a technology-run physical retail store listed this month as one of the world’s ‘must-see’ stores.
Honestbee’s dire predicament is the result of high marketing costs faced by most online startups in Asia: building critical mass takes massive investment in digital marketing, discounting and – especially in the case of delivery apps – recruitment.
TechCrunch has been shown financials for the company from last December which showed revenue of S$2.5 million (US$1.8 million) and a loss of $6.5 million on transactions totalling $12.5 million.
About 80 per cent of the company’s revenue comes from Singapore, Taiwan and the Philippines.
Honestbee issued a statement earlier this month attempting to put a positive spin on its perils, saying the decision to “temporarily” suspend its food verticals in Hong Kong and Thailand followed a strategic review of the company’s business, so it could “simplify what we do and how we do it to better meet what our consumers want”.
The company said 6 per cent of its global staff would be laid off.
“The status of Honestbee in the remaining markets remain unchanged as we evaluate and we will continue to operate and contribute to Honestbee Pte Ltd.”
In addition to the layoffs announced, senior management have already left the company in the Philippines, Japan and Indonesia.