Daily deal site BigBuzzy goes bankrupt with estimated $3.7 million debt amassed
BigBuzzy, a Groupon-like Russian couponing website, has filed for bankruptcy in Moscow, the Russian business daily Vedomosti reported earlier this month, citing a source in the Moscow Court of Arbitration.
The company failed to hit its 2011-2012 sales target and amassed outstanding payables it was unable to meet, admitted BigBuzzy CEO Sergei Belousov. Between July 2012 and now, creditors brought 24 lawsuits against the discounter — a staggering stroke of bad luck for a company that, as recently as January and February, had ranked as Russia’s fifth-largest discounter as measured by daily users (with an average of 126,000).
As the court adjudicates claims from creditors, Belousov hopes for debt restructuring and vows to partially pay off the debts, using proceeds from discount events that “the team of former employees” still manages through the BigBuzzy website.
The troubled discounter still owes The Wright Brothers, a St. Petersburg production center, about 300,000 rubles, or $9,230, for theater tickets. According to The Wright Brothers CEO Anastasia Zhemchugova, BigBuzzy blamed an unsuccessful 51% iPhone 4s sale for the delay in making paytments, claiming that the problems resulted in some coupon holders demanding their money back after failing to exchange their coupons for the smartphone. Ms. Zhemchugova didn’t buy into the explanation, however, voicing her suspicion that the discounter was scheming to dodge its responsibility to pay.
The court of primary jurisdiction has already sustained The Wright Brothers’ claim, according to the Moscow Court of Arbitration.
Eldar Murtazin, a senior analyst from Mobile Research Group, reckons BigBuzzy has run up a debt of about 120 million rubles, or $3.7 million.
Since 2010, couponing websites have sprung up like mushrooms in Russia. The two leaders are Biglion and Groupon Russia. Other strong players include Vigoda.ru, Kupikupon.ru, Kupibonus.ru, and Bigbuzzy.ru, whose monthly turnover may exceed $1 million. Approximately 200 smaller players are trying to assert themeselves on the market.
“As far as I know big players like Vigoda, KupiKupon, KupiBonus are firing people as well,” a Russian industry expert told East-West Digital News. “The whole coupon market is not going very well around the world. Groupon seems to be expanding to more ‘classic’ market segments like payments, scheduling and loyalty management. They aim to become an infrastructure platform for local businesses, like OpenTable, shifting their main focus away from discounts as such,” the expert added.
Among the other startups that crashed this year are Babyboom.ru, an online retailer of children’s goods, and CollectionPrivee.ru, a flash sales site focusing on the premium and luxury segment.