Vietnam’s competitive e-commerce landscape has taken its toll on niche marketplace Leflair, which has decided to suspend its local business operations for a year.
Local media outlet CafeBiz first reported this development.
Leflair, which sells high-end products, has ceased its local business operations as part of a business model shift, co-founder and CEO Loic Gautier told DealStreetasia. He added that the startup would focus on “less capital intensive” parts of the business.
Gautier said the startup will retain its cross-border e-commerce business, fulfillment centre in Singapore and the newly-launched Philippine operations.
The change in business model is expected to help Leflair’s operation to become “leaner,” with the ability to “change faster,” the CEO said.
In a letter to merchants, as cited by CafeBiz, Leflair said, “The changes in the investment landscape for startups have resulted in difficulties for Leflair in pursuing the current business strategy. Under a capital crunch and requirement for cutting costs, we have to come up with the tough decision to cease our operations in Vietnam.”
Gautier confirmed sending the letter to merchants announcing the move.
Founded in 2015 by former entrepreneurs of Rocket Internet, which sold its Lazada unit in Southeast Asia to Chinese giant Alibaba, Leflair targets the rising middle class in Vietnam who are willing to pay for premium products.
It most recently raised $7 million from Belt Road Capital Management and South Korean retailer GS Shop. The round marked the second Vietnamese investment for the Mekong region-focused fund and the first direct investment by GS Shop, a limited partner of 500 Startups Vietnam, which itself is an early backer in Leflair.
Leflair had also raised about $5 million from investors including Capital Management Group, AME Ventures, Hong Kong-based Caldera Pacific and international angel investors.
Vietnam’s e-commerce landscape has seen several instances of companies merging or winding up operations in recent years.
Local conglomerate Vingroup and South Korean chaebol Lotte merged their marketplace websites with other units, claiming to pursue the new retail model.
While Vingroup merged the Adayroi website with its fintech arm VinID, Lotte merged the marketplace with SpeedL, the online version of its supermarket chain.
MobileWorld Group shut down its e-commerce unit Vuivui.com while Thai Central Group’s Robins Vietnam closed its online fashion store. Furthermore, Vietnam witnessed a spate of closures including Beyeu, Deca, Lingo, Hotdeal and Muachung back in the 2016-17 period.