ShopX said it has become unviable for it to operate at scale given the low margin profile of the industry
The Nandan Nilekani-backed startup has not been able to generate enough cash flow or raise new capital, and is unable to meet its repayment obligations
Edtechs Crejo.Fun, Udayy, and SuperLearn and digital solutions provider Proton also shut operations earlier this year
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Bengaluru-based ecommerce enabler ShopX has shut operations and filed an application with the court for insolvency and bankruptcy.
A ShopX spokesperson confirmed the update, first reported by Entrackr, and told Inc42 that it has become unviable for it to operate at scale given the low margin profile of the industry.
“While we succeeded in achieving various milestones, it became unviable to operate at scale given the low margin profile of the industry, and hence we took the hard decision to close the business. As the company wound down its operations, the paramount focus of the company and its shareholders was on respecting the company’s obligations including those of the employees which were cleared in full, in spite of the difficult financial condition faced by the company. The unpaid loan and interest obligations of the company are limited to its main shareholders,” the person said.
The startup has reportedly taken multiple loans from Fung Investment and is unable to meet its repayment obligations due to insufficient funds. Owing to the unsuccessful business model, it has also not been able to generate enough cash flow or raise new capital.
ShopX, founded by Amit Sharma and Apoorva Jois in 2014, provided logistics and procurement support to kirana stores and other SME retailers. It offered assisted ecommerce solutions, including sourcing, supply chain and credit lines. It also provided digital services such as mobile and DTH recharge, bus and flight bookings, and utility bill payments.
Backed by investors like Nandan Nilekani, Fung Strategic Holdings, Rajesh Ranavat and Kewal Nohria, the startup had raised nearly $60 Mn till 2020.
While the B2B ecommerce space witnessed a boom in 2020-2021, ShopX failed to make a mark within the ecosystem and decided to pivot from its core model to an ecommerce enablement platform. It also failed to raise any funding in 2020 and 2021 – the years that saw several startups in the B2B ecommerce space, including Moglix, Udaan and OfBusiness, becoming unicorns.
ShopX had nearly 2 Mn retailers on its platform in 2020, and had decided to take the drone delivery solution route to serve its retail customers. However, soon after, it became a Shopify-style platform, pivoting to the consumer internet space. It launched a super app-style ecommerce platform for consumers for bulk and retail buying, deep discounted products and reward points-based shopping mechanisms.
The latest development comes at a time when the startup ecosystem is seeing a decline in funding amid whispers of a funding winter. Besides ShopX, the year 2022 has so far seen edtech startups Crejo.Fun, Udayy, and SuperLearn, and digital solutions provider Proton shutting shop due to tough market conditions and funding crunch.
Besides, many Indian startups have also resorted to cost-cutting to extend their runway. The Indian startup ecosystem has seen over 11,000 employees being laid off in 2022 so far.
Update | August 22, 2022, 10:10 PM
The story has been updated with comment from a company spokesperson.
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