(Editor’s Note: Article is updated on September 20 with additional responses)
Homegrown multi-label retailer Naiise made headlines earlier in April this year when it announced its abrupt closure due to financial woes.
It was struggling to repay multiple vendors and in January last year, some homegrown brands were pulling out of its online and physical stores due to payment delays of up to a year.
Following widespread news of its financial struggles, Naiise officially ceased operations on April 14.
Founder Dennis Tay also announced the decision to liquidate the business after eight years of operation, and revealed that he is filing for personal bankruptcy.
Fast forward five months later, Naiise has made an online comeback and relaunched its website yesterday night.
Most brands were not able to recover their debt
The biggest question that weighed on everyone’s minds when they read the above news was: have they repaid all their debt?
Singapore fine fragrance brand The LAB Fragrances — one of Naiise’s creditors — is owed over S$10,000, which has not been fully repaid till today.
After the small claims court officially ordered to Naiise the repayment of S$10,244, Naiise only paid back S$1,000, so we are still owed over S$9,000.– Taylan Torin, founder of The LAB Fragrances
Recounting his partnership with Naiise, Taylan Torin, founder of The LAB Fragrances, said that they started selling with Naiise back in May 2019. Naiise had duly paid them for the first two months (in May and June 2019), but defaulted on all the subsequent payments.
He acknowledged that the sales generated through Naiise were “actually pretty good”.
“They were cashing in the money generated from sales of all the products from the brands they were carrying, but just were not returning the contracted portion of that money back to brands,” he explained.
The LAB Fragrances continued on with Naiise until July 2020, before they finally lost all faith in them after “countless empty promises and different sorts of excuses”, the last of which was Covid-19.
However, it’s a known fact now that Covid-19 was not the primary reason for the retailer’s downfall. In fact, it has reportedly been defaulting on payments since 2016.
As such, many brands see this Covid-19 narrative as a mere coverup for their mistakes.
Taylan said that it is also well-known among the micro-brands community how Tay and his wife (who is an ex-director of Naiise) were maintaining a luxurious lifestyle, while telling brands that they had no money in the vaults at the same time.
According to a document by Deloitte — which oversees Naiise’s liquidation — seen by Taylan, Naiise owes money to over 400 brands, totalling “in scale of millions of dollars”.
Deloitte tells that the acquisition of the online assets of Naiise didn’t generate enough money to be able to repay any of the brands.
We understand that the money generated will be used to cover the debts of Naiise to priority creditors such as landlords and/or banks. So no brand will benefit from this transaction.– Taylan Torin, founder of The LAB Fragrances
Summing up, Taylan describes this whole experience as frustrating, and finds it unfair for micro-brands who are the most vulnerable.
He cited several reasons to this, such as them not having proper legal representation, not having resources to defend themselves, not identified as “prioritised creditors” so they don’t benefit from the redistribution of the liquidated assets, and the lack of options to create and build sales channels so they feel obliged to follow initiatives like Naiise.
He added that the common belief among the local retail community is that Naiise took advantage of this vulnerability to finance themselves.
“At the end of the day, everyone gets a slice or two; but there is nothing left for these brands.”
So why is Naiise returning to retail?
With the relaunch of Naiise, it’s safe to say that Tay is out of the picture as the company has since been acquired by WestStar Group. The sum of the acquisition deal was not disclosed.
WestStar Group is an independent multi-portfolio investment company that provides independent and professional investment advice, and personalised investment management services to entrepreneurial families and institutions.
It’s helmed by Ong Lay Ann, the former CEO of the now-defunct honestbee. With how honestbee exited Singapore (also plagued by financial problems), it does not exactly inspire confidence in the new management.
However, in an interview with Vulcan Post last year, Ong shared that he has had a fair share of experience helping to turn around sinking ships.
I’ve done a number of these turnarounds and restructuring before. I’ve got a track record of doing this. In Australia, I turned around a company pretty fast. I actually hired back the management that used to run it and (together), we built it from nothing … (till) it’s listed on the Australian Stock Exchange.
Today, I’m still the chairman and larger shareholder there. Along the way, we’ve acquired a few more businesses and today, it’s profitable.– Ong Lay Ann in a 2020 interview with Vulcan Post
He also shared then his plans to save honestbee by shifting its focus to a quick-service restaurant (a pizza joint in particular), and restart its online grocery delivery business in Malaysia, Thailand and the Philippines.
None of these plans have come to fruition unfortunately, and there has been no new movements from honestbee since then.
With his failure to revive honestbee, can we then trust Ong to do the same for Naiise, which has lost a lot of consumer and brand confidence?
As the saying goes, ‘once bitten, twice shy’. Regardless, a second chance is only fair and this website relaunch might just serve as a successful restart for the business.
What’s different this time round
Under this new ownership, Naiise will stand strong to its initial commitment of championing local designs, creatives and artisans.
Naiise’s current business model works just like a typical online marketplace, where products purchased is fulfilled by vendor.
Naiise has also promised sellers that they will be “paid instantly upon every successful order fulfilment”.
Previously, products are sold on a consignment basis where suppliers are paid only for the merchandise sold, minus a commission fee of between 30 and 45 per cent of the retail price.
The company also has plans to introduce an “incubator model for upcoming designers” and “buy now, pay later concepts”, which are currently in the pipeline.
Vulcan Post has reached out to both WestStar Group and Ong to elaborate further on their business plans to grow Naiise, but did not receive any replies as of yet.
According to Naiise, over 500 merchants will be featured gradually on its platform. It will feature more hyper-local, eco-friendly and independent international brands in the coming months, including debut from new brands.
Some brands listed on its new website include Wet Tee Shirt, Punny Pin Greeting, Ecobar SG, Wick & Litt, Changi Chowk and Petale Tea, amongst others.
Why some creditors are jumping onboard Naiise again
It’s interesting to note that multiple brands — which are creditors of Naiise — are now relisted on Naiise, such as Wet Tee Shirt, Neis Haus, Punny Pin Greeting, Changi Chowk, Petale Tea and Farm to Market.
Nicholas Chan, director of Wet Designs, which owns and operates Wet Tee Shirt, told Vulcan Post that Naiise owes them over S$69,000 and has yet to fully repay the debt.
When Naiise was still operational, the startup had attempted to restructure the debt.
We were offered some payment of our invoices, but we indicated that we can be paid later as long as the profits from our end can pay off the few trouble-making vendors (those who want to see the demise of Naiise to the end), so that Naiise can focus on making sales.
This was done one to two weeks prior to these few vendors — most of whom got paid — making noise in the media about Naiise focusing on online-only play and shutting down its retail stores, (to the point) that the banks foreclosed on Naiise.– Nicholas Chan, director of Wet Designs
After these group of vendors “successfully took down Naiise”, Wet Tee Shirt offered to exchange debt for equity in Naiise.
They attempted to bring together the major creditors to buy over Naiise’s assets to rebuild it, with participating major creditors getting a “special debt repayment schedule” from the newly-formed entity in exchange for their commitment in the acquisition.
However, this fell through because of the “sabotage” from the few vendors, lamented Nicholas.
When asked why the company chose to relist on Naiise, Nicholas explained that Naiise has performed well in the past with its focus on hyperlocal products.
“It’s not deviating from that approach, so I do not see any issues,” he said. “I (also) think it’s great that Naiise is able to restart operations, albeit with a new management. The old management had their heart in the right place, but had no business sense in working with local brands and businesses.”
(Moreover), the overall (retail) market has been bad for over two years, and marketplaces like Lazada and Shopee, which is flooded with cheap China junk, has been decimating local brands left and right. Our presence there only results in China knockoffs of our products.
(Running a) business is always about risk-taking. We just take the risk that the new management is willing and able to keep to the original focus in hyperlocal products.– Nicholas Chan, director of Wet Designs
This is the very key factor that is crucial for Naiise to survive and thrive: the ability to convince and attract brands to get listed on Naiise. Without the support of these brands, Naiise will just be an empty shell.
One way it’s attracting brands is by offering merchants a waiver of listing fees and reduced last-mile delivery rates till the end of this year.
Naiise still stands a fighting chance
Prior to its saga, Naiise was seen as a success story in the sluggish retail scene and a champion of local designers.
It provided a platform for local brands to market themselves, and was the go-to place for quirky and Singapore-themed products like kueh-shaped cushions and t-shirts with Singlish slogans.
Right now, establishing a purely-online presence is a smart move, especially when retail has taken a huge hit during these pandemic times. It’s important for Naiise to only consider expanding when they have time and money on their side. After all, rapid growth can end up killing the business.
Today, Naiise is still helping to bridge a gap for local brands who need to market themselves. There’s not many of other such platforms or initiatives in Singapore, besides Design Orchard.
If Naiise is helping to solve a pain point, then it still stands a fighting chance. It just needs to make sure that history does not repeat itself, and if their core mission is to support local brands, then they better stand by it.
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Featured Image Credit: Naiise