Paperfly likely to shut down
One of the post-pandemic period's top logistics firms, Paperfly is poised to close down having stopped accepting orders since last week, in a grim reminder of the current challenges faced by Bangladesh's e-commerce sector.
"The company has stopped taking new orders since last week. After talking to the board, the management will take further steps," the company said in a statement to The Daily Star today.
Paperfly is in a dire cash crunch due to non-arrival of funds on time and for not getting several fixed deposits from CVC Finance Limited, it added.
Md Mamunur Rashid Molla, managing director and CEO of CVC Finance Limited, acknowledged that Paperfly had kept some funds with them.
Paperfly reached out to Bangladesh Bank over the encashment issue and afterwards CVC Finance Limited has been paying the company in regular instalments and most of the funds has been transferred, he said.
According to a top official of Paperfly, there is a very high possibility of the company having to completely shut down.
This is also bad news for its over 700 employees who would inevitably lose their jobs.
"We haven't informed them of anything and the office is running as usual. After the board meeting, we will decide what to do next," said the official wishing anonymity.
Paperfly was supposed to get a round of funding in January from Ecom Express, one of the leading tech-based e-commerce logistics solutions providers in India which owns over 80 percent stakes of the company, said the official.
It has not come, he said, adding, "So, we have been slowly scaling down our operations since then. And now we are only delivering the pending orders."
Founded in February 2016 by four individuals -- Shahriar Hasan, Razibul Islam, Rahath Ahmed and Shamsuddin Ahmed, the company had set foot in almost every union in Bangladesh by early 2021.
During the pandemic, it witnessed a massive rise in delivery requests.
Before the pandemic, Paperfly made more than 9,000 deliveries per day.
It fell to just 10 per cent at the beginning of the nationwide lockdown in April 2020 which aimed to curb the spread of Covid-19.
The scenario started to change for the better after the government eased restrictions at the beginning of June. Paperfly was making around 15,000 deliveries a day in early 2021.
Sensing the huge prospect of logistics in Bangladesh, Ecom Express acquired a majority stake in Paperfly for around Tk 100 crore in January that year.
In April 2022, the logistics-tech company announced another Tk 102 crore investment from Ecom Express.
However, after the pandemic-induced rise, the e-commerce platforms, the main clients of Paperfly, witnessed a downturn in orders.
The closing of operations of Paperfly is a major blow for the startup ecosystem of Bangladesh, said Fahim Mashroor, CEO and founder of Bdjobs.
"Paperfly has got a huge investment from outside the country. But shutting down proves that solely large investments cannot make any startup successful. A sustainable and profitable business model is required for a startup to be successful," he said.
This should be a wake-up call for a lot of other startups in the country, he said.
"At the same time, I think there is already an overcapacity of logistics compared to demand. E-commerce demand in the country has not been growing that much in spite of a lot of hype," said Mashroor.