According to our insider's sources today, GEMFIVE has just announced internally to cut down its headcounts by close to 80%, retaining only its core employees. The question of whether 50 over staffs are being retrenched or reallocated remains unclear.
For those who are unaware, GEMFIVE is an online shopping site (or technically an e-commerce marketplace) owned by Hong Leong Group. Hong Leong Bank is the fifth largest bank in Malaysia.
GEMFIVE was launched in May 2015, and has since invested sizable resources on business development, marketing and headcounts.
At one time last November (2016), we had recorded GEMFIVE's growth shooting up to the fifth most visited online shopping site in Malaysia, after heavy marketing investments.
However, the growth has stalled after December 2016 and traffic is dropping since then, a 47% decrease from January to February alone.
According to our insider's sources today, GEMFIVE has just announced internally to cut down its headcounts by close to 80%, retaining only its core employees. The question of whether more than 50 staffs are being retrenched or reallocated remains unclear at the time of writing.
This is not the first time we witness the struggle of e-commerce companies here, even the Japanese e-commerce giant, Rakuten has ceased its operation in Malaysia.
It is not a surprise that, a business conglomerate as huge as Hong Leong Group finding e-commerce a "mis-match" with its DNAs, which is very different from its traditional business like finance, property development etc.
Fighting within the domain of e-marketplaces alongside Lazada, 11street and Lelong.my is even more challenging, how do you win this battle without heavy marketing and discount? Not to mention it takes years for this kind of business just to break-even, if it ever happens.
So, what's next for GEMFIVE (and others)?
1. Will they follow the path of Rakuten (shutting down), or pivot a.k.a "Groupon is now Fave" style?
2. How about ~80% of the employees? Are they being laid off, or reallocated to other subsidiaries within Hong Leong Group?
3. This top 10 online shopping sites list was updated as recent as just 3 or 4 months ago, we have already seen some changes to #5 and #6 from the chart toppers. You would find it hard to disagree that eCommerce is really a fast-paced industry. Oh, what is Zalora up to?
4. How does this development impact the sentiments within our e-commerce industry? Is e-commerce business sustainable, especially for online marketplace?
5. What's next for other e-marketplaces in second tier, in the likes of Shoppu, Logon etc? Is there a possibility of a M&A between GEMFIVE, Shoppu and Logon?
Note: We are contacting GEMFIVE to confirm the facts and our questions above, this article will be updated if and when there is any official feedback from GEMFIVE.