Beyond the Rack — one of the many online retailers that rode the flash sales trend all the way to the top and then back down the mountain — has filed for protection from its creditors as it faces both a liquidity crisis and a lack of buyer interest.
The Canadian company has raised about $90 million in VC funding and signed on millions of members but has struggled to attain profitability and consistent consumer interest.
A familiar enough tale in the flash sale game these days.
Though negotiations with a buyer for the firm were underway, an agreement could not be reached, according to Beyond the Rack’s most recent court filings.
“We’ve solicited 423 potential buyers to date, and we’re asking for offers by April 18,” said Benoit Gingues, a partner at Richter Advisory Group Inc., the company’s court-appointed monitor. “We’re confident that we will find a buyer that will continue the business.”
Beyond the Rack’s specific entry into the market was heavily discounted designer products, accessories and home decor. Sales were about 48 hours long, and subscribed members had advanced warning.
The firm, despite 14 million members, did not bring in actual profit and spent its VC funding on “aggressive and costly marketing campaigns aimed at increasing customer growth,” according to court papers. As of its creditor protection filing, the firm has less than $1 million in cash left.
“The company operates in the nascent eCommerce retail industry, where many of its peer companies are in a similar position in that they have incurred financial losses and have yet to demonstrate a positive cash flow and financial sustainability,” according to court papers.