The Bengaluru-based startup lacks success in directing its business model to a stronger target market, and fails to detach from alternative strategies in a timely alternative strategy, leading to the current situation, four people who know directly about the matter told Mintseek anonymity. Payments to multiple suppliers have stalled over the past six months, while employees have received only delays and partial pay.
The above-mentioned person said the company is now consulting lawyers and its investors and has proposed a consensus on bankruptcy with the National Corporate Law Tribunal (NCLT).
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Bhavna Suresh, co-founder and CEO of 10club, had repeatedly tried to reach 10club, including a detailed email seeking comments on March 11, and no response was drawn.
Business model decomposition
10club tries to follow what is called the “Thrasio” model worldwide. A company will merge multiple small e-commerce brands and sellers under its umbrella and then operate it as an organized company.
By doing so, companies such as 10Club and its rival Mensa Brand promise to expand operating margins and allow smaller brands to generate greater returns by reducing overheads such as office, accounting and legal expenses, as well as other operating costs. Mensa Brands became “India’s fastest unicorn” – with a valuation of $1.2 billion in six months since its operation began in November 2021.
However, 10club shows no hope of turning to profit. The company’s annual financial application for visiting MINT’s corporate affairs department through business intelligence company Tofler.in shows that as of March 31 last year, its net losses were on the ₹$11.63 billion – from ₹166 million fiscal year.
In one year, the June 2022 startup added $30 million to include debt from existing investors to continue its acquisition and expansion plans in a year, in the year of a $40 million seed financing round.
“It’s hard to determine the single reason for failure here – Loet said 10club puts its bet in the wrong place, and once it does, it’s hard to quit the brand they’ve already obtained,” said one of four people quoted earlier. “Its focus is that the niche area where home accessories and furniture are its focus does look good on paper, but the inability to detect fierce competition from traditional home companies and global giants like IKEA has left it with little room to change its business.”
10Club’s scrolling model focuses on home care categories such as gardening, kitchens, home decor and furniture. Some of the brands the company acquires include gardening brands such as Kraftseeds, Gate Garden and Kriti Kalash; sports brands such as Skudgear Rapidotzz, Beclina and Aurion; and Mynewborn in baby care.
According to the second person cited earlier, the company has “no cash”. “It has stopped funding the brands it has acquired.”
“The founder’s vision was not working, and the failure to execute and the lack of skilled management further undermined its prospects,” said the third party. “The brand acquired by 10club did not work, and it was a capital-rich area because it required constant acquisitions and active marketing activities.”
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10club is close to receiving several petitions from the brands it received, as some spending is waiting. Incumbent investors are also out of the way out, people associated with the business say.
One person quoted above added: “In most cases, there is no clear path to stabilizing the business, and there is nothing in which existing investors offer a breathing opportunity to 10club.”
Providing an e-commerce aggregation business with a smaller margin is already difficult worldwide. In November 2023, Thrasio, the pioneer of the model, closed the store, even if it is worth $10 billion.
