ENSOGO EXECUTIVES have been summoned by the consumer-protection agency, as remedial measures are sought to assist Thai subscribers hit by the Australia-based e-commerce company’s abrupt shutdown of its Southeast Asian operations on Tuesday.
Prapatpong Chanchit, legal officer of the Office of the Consumer Protection Board’s (OCPB) direct selling and direct marketing division, yesterday said the executives would be called in for a meeting next week to clarify how the company would assist its Thai subscribers.
Apart from coming up with remedial measures, the OCPB will also investigate whether the company has been involved with fraudulent activities following reports that it faced a series of financial problems before shutting down the business.
Ensogo’s Thai unit was registered with the OCPB as an e-direct marketing business in 2014, and the company has provided about 6,000 product and services, including discount coupons for more than 1,000 items.
Last year, the company reportedly had more than 3.5 million subscribers. On its website, Ensogo said that across Asean and Hong Kong, it had 7.4 million subscribers.
On Tuesday, however, it announced the shutdown of all its businesses in Asean. The Commerce Ministry’s Business Registration Department yesterday removed its "DBD" verification for the website upon the company's notification of the termination of on-line services. However, the department's director-general, Pongpan Jiarawiriyapan, said that Ensogo did not make a move to dissolve the company. By law, as the on-line business was the only business objective of the company and it was terminated, Ensogo must notify the department of the company dissolution within 30 days.
All Ensogo subscribers’ rights must be protected, said Prapatpong, who urged all merchants to show responsibility by accepting all existing coupons issued by the company.
Nuchjaree Suphateachanart, a regular Ensogo subscriber – particularly for hotel and dining-related deals – was saddened by the news, saying that Ensogo offered good choice to consumers.
“Yet, the company and its merchants should take responsibility. The vouchers should be valid until their expiry dates, or customers must be fully refunded,” she said.
Yesterday, another affected subscriber set up a Facebook page called “SosadEnsogo” at https://mobile.facebook.com/SosadEnsogo?_rdr, to help all subscribers seek refunds.
He said that based on complaints from more than 2,000 people, the combined damage to Thai subscribers was well beyond Bt1 million.
Surangkana Wayuparb, director of the Electronic Transactions Development Agency, said yesterday that some merchants that were Ensogo partners were not accepting coupons, claiming that they could not access the transaction system.
She said that this was clearly a lame claim, and that all customers should get full refunds. Several hotels and restaurants are among the businesses not accepting Ensogo coupons, but some still welcome the coupons as a relief measure, including The Pizza Company, SF Cineplex, Paul Thailand restaurant, Sizzler restaurants, and Fitness First Thailand.
The Pizza Company said it would accept the coupons until July 10.
Poor strategic move
Experts in the e-commerce industry attributed the shutdown to Ensogo’s decision to turn itself from a flash-deals business into a market-place platform. Michael Cluzel, co-founder and chief executive officer of Eatigo, said traditional flash-deals business tended to lose money as merchants seek profits, against the high cost and complexity in keeping the deal factory going.
However, he said that while Ensogo’s decision to move to the market-place model seemed technically sound, it was a “very red ocean” environment in which to do business.
“The general trend that we start to see, not just in Southeast Asia, is that businesses that are built only on top-line growth, but not on positive profitability, are bound to run into trouble,” he added.
At Eatigo, growth and profitability go together, the CEO said, and this seemed to please investors who seek start-ups with a clear and sustainable path to profitability.
Pawoot Pongvitayapanu, president of the Thai eCommerce Association, said Ensogo’s decision to embrace the market-place platform stemmed from low profits from the prior business model.
However, the new model landed it in the red ocean dominated by giant players like Lazada, which has full support from Alibaba, he said.
“Alibaba’s acquisition of Lazada is the main reason why [Ensogo] investors decided to pull back. In the past, investors might have focused solely on business growth, but now they look at both the revenue-generating plan and profits,” he explained.