E-commerce enabler ShopX has shut down its operations. The Bengaluru-based company has also filed an application for insolvency and bankruptcy to adjudicating authorities.
The bankruptcy application isn’t surprising as the company pivoted from its core model to an e-commerce enablement platform in mid 2021.
The board at ShopX has passed a special resolution to file an application under section 10 of Insolvency and Bankruptcy (IBC) code, 2016, according to the company’s filings with the Registrar of company (ROC).
ShopX has confirmed the development to Entrackr.
“ShopX has been instrumental in co-creating the e-B2B industry. Over time, it has become unviable to operate at scale given the low margin profile of the industry, and hence the decision to shut down operations. We have focused on orderly and ethical windup, respecting all company obligations,” said the company’s spokesperson. “The loan and interest obligations of the company are limited to its main shareholders,” the person added.
Founded in 2015, ShopX had a similar model to Udaan until mid-2021 when it used to offer an assisted e-commerce solution which includes sourcing, supply chain and credit line for five years. However, the model didn’t work and the company changed track and also laid off over 50% of its employees in June.
Entrackr had exclusively reported the pivot and layoff last year.
As per the regulatory filings, ShopX has taken multiple rupee loans from its Singapore-based investor Fung Investment and is unable to meet its payment obligations (interest on loans) due to insufficient funds. The company also added that since the business model has not succeeded, it has not been able to generate any enough cash flow or raise new capital. As a result, it is unable to meet its various payment obligations and has ceased to be a going concern.
Backed by Nilekani and Fung Investment, ShopX has raised over $54 million to date and was valued at over $100 million during the last round. Nilekani alone invested $18 million in the Sharma and Apoorva Jois-founded company.
ShopX’s struggle could be evident from the fact that the company couldn’t manage to score any new round since April 2020, a period when most of the startups in the b2b e-commerce and e-commerce enablement space collectively raked in over billion dollars.
Following the pivot, ShopX also tested the consumer internet space with the launch of a cashback app which used to provide discounts on the MRP and reward points for each purchase on UPI payment [via its app] at any local store and its partners.
Update: The headline and story have been updated to reflect comments from ShopX.