Report: eCommerce Company Benitago Files for Bankruptcy

New York-based eCommerce company Benitago has reportedly filed for bankruptcy.

The firm is seeking protection from creditors two years after raising $325 million in funding, The Wall Street Journal (WSJ) reported Thursday (Aug. 31). It listed both assets and liabilities of between $50 million and $100 million.

Benitago did not immediately reply to PYMNTS’ request for comment.

The company’s business model involves acquiring small third-party sellers on Amazon’s online marketplace and running them as a group, thereby providing marketing and logistics expertise and benefiting from economies of scale, according to the report.

However, Benitago faced challenges as consumer preferences shifted during the later stages of the pandemic, the report said. The eCommerce sector experienced a decline as lockdowns ended, leading to a rapid reversal of fortune for Benitago. The shrinking eCommerce market over the past two years has contributed to the company’s financial difficulties.

At the time of filing for bankruptcy, Benitago had approximately $7.5 million in cash, per the report. The company plans to restructure its debt and potentially sell parts of the business, including entities that own the intellectual property rights to 15 brands and sell over 300 products.

Benitago’s bankruptcy filing reflects the challenges faced by the market for Amazon brand acquirers, according to the report. Funding for such acquirers declined by 88% last year, with only five funding deals completed in the first five months of this year. Business analytics firm CB Insights has noted that the market is “unraveling,” and debt-laden aggregators are putting their investors at risk.

A larger rival of Benitago, Thrasio, has also faced similar troubles, resulting in layoffs and the departure of key executives, the report said. These challenges have resulted in a flight of capital for the sector.

Thrasio was at one point valued at $10 billion before moving to the public markets, PYMNTS reported in May 2022. However, that didn’t happen because the funding did not come through, leaving the company burning through its own capital that had been previously raised. Twenty percent of the staff was laid off at Thrasio.

As of May, the Census Bureau reported that eCommerce now accounts for a 15% share of retail, but PYMNTS data places it at a 22% share.