[updated 5 May 2020] JollyChic reached out and expressed that the warehouse in Riyadh is not shutting down, but running as usual. We have amended the post accordingly. We seek more facts, debates and generally healthy development of any industry. Below is the public message from JollyChic: 

 After an open letter to suppliers outlining its cashflow issues and the shutdown of its Dubai warehouse, JollyChic is stepping up its cost cutting by laying off people at its warehouse in Riyadh, Saudi Arabia.

The stress emerged long before Covid-19 crisis, and we wrote about it last year. JollyChic seized the ecommerce opportunity in the Middle East early on, way ahead of other players.

The cross border part, where it relied on vast amount of value-for-money selections from Chinese manufacturers, was the breakthrough that led to Sequoia’s 2018 investment, which valued the company as a unicorn.

However, as competition steps up, its multiple attempts to expand along the value chain encountered strong challenges. The investment from Group 42 last year threw a lifeline.

It looks like JollyChic is retreating to its roots as a cross border company from the the boarder marketplace.

Looking outside Middle East, Chinese cross border players to India, including Club Factory, will probably face further strain as India extends its lockdown.

These are circumstances testing the companies’ resilience. In no way they indicate the end of Chinese cross border ecommerce platforms to emerging markets.

AliExpress is still going strong; SheIn marches on; and ForDeal is biding its time to perfect its matching algorithms (which it believes it the core of ecommerce).

Expect more movements to come soon.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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