Ensogo gets access to Vipshop’s vast volume and selection of existing inventory
To cooperate in logistics, merchandising, technology, marketing, user acquisition
E-COMMERCE company Ensogo Ltd, formerly iBuy, said it has secured a strategic investment from China’s online discount retailer Vipshop Holdings Ltd.
Vipshop will take a 12.2% stake in Ensogo by being issued with primary shares, Ensogo said in a filing with the Australian Securities Exchange (ASX).
The investment was made for an aggregate cash consideration of approximately A$6.4 million (US$5 million) though E&A Belina Investments Ltd, a wholly owned subsidiary of Vipshop, at an effective issue price of approximately 10.8 cents per Ensogo share.
Proceeds of the subscription, to be received by Ensogo by no later than March 17, will be used to develop and grow Ensogo’s existing business, the company said in its ASX filing.
As a part of the strategic investment, the companies will also enter a strategic operating partnership, in which Ensogo will have access to Vipshop’s vast volume and selection of existing inventory, all to be made available for immediate shipping.
The companies also intend to cooperate in the areas of logistics, merchandising, technology, marketing and user acquisition – the very expertise which enabled Vipshop to scale its revenues from US$32 million in 2010 to US$3.77 billion in 2014, Ensogo said in a statement.
“We are extremely excited to welcome Vipshop as an investor, shareholder and strategic partner,” said Ensogo chief executive officer Krzysztof Marszalek (pic).
“As a leading online discount retailer for brands, Vipshop has pioneered the online discount retail model in China. We believe our long-term perspective for partnership will allow us to generate positive synergies between our businesses in the future.
“After more than doubling our gross turnover to over A$150 million (US$117 million) in 2014, we look forward to working with the Vipshop team to help further strengthen and develop Ensogo’s business throughout South-East Asia,” he added.
For its financial year ended Dec 31, 2014, the company reported revenue of A$64.8 million, incurring an after-tax loss of A$67.4 million after an impairment of approximately A$47 million to align its balance sheet as a result of the Vipshop investment, Ensogo said. [A$1 = US$0.78]
Headquartered in Singapore with operations in Hong Kong, Singapore, Malaysia, the Philippines, Indonesia and Thailand, Ensogo last year had two rounds of layoffs, the second across all its markets.
The downsizing exercise came after the board ordered management to cut approximately US$216,000 from their monthly operating expenditure.
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