Imagine spending big bucks on an app for budget-conscious shoppers that requires them to manually enter grocery prices every time they change—which could be as often as every week. (It takes user-generated content to a whole new level) Well, grocery app Frugl (ASX: FGL) thought otherwise and tried to pull off an Instagram-like platform (always relying on users) for grocery prices. Little did it know that the concept is not half as appealing for users.
Now, it is looking to completely digitise and redevelop its business model. The Company is teaming up with Southeast Asian digital transformation company Trienpont to engage in some joint projects in Australia and Southeast Asia. It is also exploring commercial expansion opportunities for its Frugl Grocery and InFocus Analytics technologies and expertise in South East Asia.
Trienpont is a software solutions business based in Bangkok, Thailand. It specialises in digital transformation, software development, cloud migrations and integrations, and technical consulting and has existing clients in Australia, Asia, and Western Europe.
Frugl and Trienpont will explore key activities aimed at enhancing their collaboration. The signed Memorandum of Understanding (MoU) highlights their intention to jointly explore potential projects in Data-driven Intelligence Products, Software development, Cloud Migrations & Integration, and Technical Consulting in the APAC and EMEA markets.
Plus, as a result of the agreement, Frugl is metaphorically washing its hands off the grocery app. It will hand over the responsibility for developing the Frugl Grocery app to Trienpont. The latter will maintain, support and develop new features for the Frugl Grocery mobile app and its supporting infrastructure in Australia.
In H1 FY23, Frugl reported a revenue of $725k against a net loss of $879.6k. A decrease in marketing investment—wherein Frugl decided to be frugal—resulted in reduced downloads and user account growth for the Frugl Grocery App, with growth returning to organic levels. Active users still use the app, albeit at lower levels compared to the previous quarters because of multiple flood events and global inflationary concerns.
Consequently, Frugl’s financials took a hit, displaying negative cash flows from operating activities amounting to $529k. It reported negative working capital of $1.1 million, up from $830k as of June 30, 2022. The Company’s net liabilities also increased to $1.1 million, compared to $824k.
The consistent decline in the Frugl app’s uptake prompted a strategic review of the business. Frugl realised that change was much needed, and it must incorporate a blended model of local and international resources that will better suit its needs going forward. It will also provide for more efficient use of the Company’s operating capital.
The partnership between Frugl and Trienpont will redirect the Company’s core platforms at a reduced operating cost and create new avenues for expansion and commercialisation of the company’s technology and expertise in analytics.
Frugl’s partnership with Trienpont represents a strategic shift for the company as it addresses challenges with its grocery price tracking app. By leveraging Trienpont’s expertise, it aims to enhance the app’s functionality, reduce operating costs, and explore new avenues for expansion.
Alinda is a Business Reporter for The Sentiment
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