Clouds of crisis deepen over e-commerce sector, this company is on the verge of bankruptcy
Amazon’s top aggregator Thrasio has filed for bankruptcy in the US to reduce its losses due to heavy debt load. The company has filed for protection under Chapter 11 of the US Bankruptcy Code and has agreed with lenders to reduce its debt load by about $495 million. “We are taking steps to build on this progress by strengthening our financial position as well as working with our lenders with the intent to drive future success,” said Greg Greeley, Chief Executive Officer of Thrasio.
The credit for popularizing the concept of e-commerce aggregation goes to Thrasio. Meanwhile, the company has also received commitments of up to $90 million for new financing from some unnamed investors. If capital comes, it will be used for ongoing operations. This will help the company’s brands to survive.
CNBC had reported that Thrasio had raised $3.4 billion so far and was even planning to go public via SPAC, but the plans were put on hold due to a complicated auditing process.
Why did the company’s problems increase?
Investors betting on a surge in online sales during the pandemic poured billions of dollars into startups offering popular brands sold on Amazon, but most of it was in debt form. But as people returned to their old consumption patterns, Amazon sales slowed. According to a report by Seattle-based company GeekWire, Amazon’s online store sales were less than 40% of its total net sales in its Q2 2023 results.
According to a document filed in New Jersey Bankruptcy Court, Thrasio lists assets between $1 billion and $10 billion and liabilities between $500 million and $1 billion. According to reports, the company has earned revenue of more than $500 million and profit of $100 million in 2020.
India was also affected
In India too, the pace of e-commerce sector seems to be slowing down at present. According to data from market research firm Datum Intelligence, the e-commerce sector is expected to grow by less than 20% or about $60 billion (about Rs 4.8 lakh crore) in 2023 for the first time, whereas in the last few years this pace was 25-30%. The average increase was maintained. According to the report, the Thresio-style roll up marketplace model became popular in India during 2021 and the sector had raised about $800 million in equity and debt funding. However, due to the slowdown in e-commerce sales in India, it has become difficult for these aggregators to raise funding at present.
