Jugnu, a prominent B2B e-commerce supply chain player in Pakistan’s startup ecosystem, has announced its decision to discontinue its main business activities. In a statement released by the Jugnu team, the company revealed its plans to shift its focus toward becoming a technology platform. Leveraging its extensive technology and data suite, Jugnu aims to enable commerce, enhance financial inclusion, and introduce other advancements, thereby empowering small and medium businesses.
As part of this transition, Jugnu will give up its current infrastructure for logistics, inventory, and self-managed fulfillment centers, according to the statement. The decision to change the business model stems from the global macroeconomic situation and the need for Jugnu to prioritize capital efficiency and profitability. The company is actively reaching out to organizations to facilitate the transition of key enablers to their respective missions.
The withdrawal of an investor has been cited as a contributing factor to Jugnu’s closure, as the thin profit margins on high-cost products in the FMCG e-commerce sector have posed challenges for companies to turn a profit. Founded in 2019 by former executives of Unilever and co-founders of Salesflo, Jugnu aimed to digitize, empower, and expand small- and medium-sized retailers. With $25.7 million raised in three funding rounds, the startup successfully connected with 30,000 retailers in Islamabad, Rawalpindi, and Lahore, with plans for further expansion.
In the wake of Jugnu’s discontinuation, three MENA-based e-commerce marketplaces, namely Sary, Sarmayacar, and Systems Limited, have expressed interest in establishing contact with the business. However, concerns have been raised regarding the company’s inventory management, which reportedly faced losses of 10-15 percent due to internal pilferage. Allegations of corruption within senior management, including improper financial practices and the purchase of substandard goods, have also surfaced.
Despite the challenges faced, the founders of Jugnu are commended for their perseverance. However, a toxic work environment, office politics, and preferential treatment were identified as factors contributing to the loss of experienced and loyal employees. Other supply chain startups in Pakistan, such as Airlift and MedznMore, have also encountered difficulties and ultimately folded despite raising significant funds. The failures highlight the importance of operational management alongside marketing efforts and the need for sustainable funding strategies in the startup ecosystem.
The closure of Jugnu serves as a reminder of the complex dynamics and challenges faced by startups in highly competitive industries. While the company’s decision to shift its focus and explore new avenues is a strategic move, the impact on the local startup ecosystem and the lessons learned from this experience will undoubtedly shape future endeavors in Pakistan’s entrepreneurial landscape.