HappyFresh announced that it has officially decided to exit the Malaysian market. The company launched in the country seven years ago and posted a statement on its Facebook page today saying that it has ceased all operations, effective immediately.
Earlier this month, the online grocer suspended its delivery services without a proper explanation, but it was speculated that the move was due to its recent financial troubles. The startup’s statement confirms this theory, briefly explaining that the “current economic situation” was the cause behind its decision to shutter its business here.
According to HappyFresh, it has over 850 employees in the country. Missing from the announcement is how the company will part ways with its local staff, as it did not mention any severance package or relocation opportunities for the 850 workers — although this could be something that it will be discussing internally.
Regarding its financial issues, despite having raised at least US$97 million (~RM443 million) in equity financing along with debt financing, the Jakarta-based startup needed to raise additional capital for its operations, which it was apparently struggling to do. The company’s crisis was getting so critical to the point that it hired turnaround firm Alvarez & Marsal to review its financial position and company structures.
A Bloomberg report also claimed that even senior executives had stopped performing their day-to-day duties due to the uncertainty of the situation. In fact, HappyFresh’s circumstances already seemed dire when it suspended operations in parts of Jakarta, its home market, in early September.
Overall, the troubles facing the online grocer don’t exist in a vacuum as the overall market for grocery delivery services has been in a slump due to a slowing economy and rising inflation. Even Grab, one of Southeast Asia’s biggest startups, shut down its dark stores in Singapore, Vietnam, and the Philippines last month in order to cut costs.