Honestbee Philippines announced on April 20 that its local operations will be indefinitely suspended. Less than a week later, a report from American tech publishing group Techcrunch revealed that its country manager, Crystal Gonzalez, has resigned from her post.
Gonzalez is just one of several executives who have reportedly left the tech startup in recent months. According to Techcrunch, the country heads of Honestbee’s Japan and Indonesia operations have also quit, as well as a senior member of its “Habitat” team (its online-offline shopping vertical in Singapore), and the head of its People Operations department.
Esquire Philippines reached out to a representative of Honestbee Philippines, but the company declined to confirm or deny the news and merely said there is "nothing new to share at this time."
The snowballing of key executives’ departures across Honestbee’s markets in Asia was caused by the company’s waning financial capability, Techcrunch believes.
“Despite looking impressive from the outside, the company is currently in crisis mode due to a cash crunch — there’s a lot happening right now,” the report said.
Through a number of sources who are either former or current employees of the Singapore-based startup, Techcrunch found out that Honestbee has laid off employees and has “a range of suppliers who are owed money.”
It even cited one of their sources saying that Honestbee’s Philippine office declared the suspension because it is “waiting on Honestbee HQ in Singapore to provide further capital.”
In a text message sent to Esquire Philippines on April 22, a representative from Honestbee Philippines explained: “Our operations in the Philippines will be temporarily unavailable while our HeadQuarters works towards bringing the total business to a healthy and sustainable level.”
Apart from temporarily shutting down its Philippine business, Honestbee has also closed down its research and development centers in Vietnam and India. To make things worse, it was reported that some of its Singapore-based employees won’t be paid their salaries on time due to lack of funds.
“The issue is that the company is running out of money thanks to a business model with tight margins that’s largely unproven in Asia Pacific,” Techcrunch said.
By the Numbers
Honestbee is a startup for primarily online grocery shopping and delivery services. It was founded in 2015 and is headquartered in Singapore. Since then, the startup has branched out to other services such as food and laundry delivery services and Habitat, “the world's first tech-enabled, multi-sensory grocery & dining destination.”
Today, Honestbee is available in eight countries across Asia: Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Bangkok, Philippines, and Japan. Techcrunch, however, pointed out that maintaining operations in all of these eight markets is not cost-efficient.
The tech website said only three of its existing markets—Singapore, Philippines, and Taiwan—make up more than 80 percent of the company’s gross merchandise volume (GMV, or the gross amount of all the transactions before expenses) and net income. The Philippine market takes up 40 percent of Honestbee’s overall GMV.
Not much is reported about Honestbee’s financial position since the company has been maintaining its accounts privately. What’s publicly known is that it received a $15-million Series A investment around the time of its launch. Tech in Asia, as cited by Techcrunch, also did its own research and found that the startup has further raised about $49 million since then.
The company’s high burn rate is seen to have triggered Honestbee’s crisis. A huge chunk of the company’s costs is said to have gone to excessive use of discount coupons in order to hit short-term targets. In December 2018, the startup’s total sales and transactions amounted to $12.5 million but it only retained $2.5 million in net revenues, according to Techcrunch.
“It looks like that capital is nearly gone, at least based on what has been declared,” the tech website said.
But amid all the mess, at least two big names in the startup industry have expressed interest in acquiring part or all of Honestbee’s business, Techcrunch said. These are Grab and Go-Jek, two of the biggest ride-hailing platforms in Asia and the world.
Maybe it’s not really over yet for Honestbee, after all.
