Rising interest rates and slumping sales are a wake up call to what became a vast pool of brands and retailers who drove huge topline sales growth, with little regard for their bottomline. Patient investors and more rounds of venture capital funds kept them afloat, even as losses grew and companies were nowhere near profitability. “For every $1 of revenue DTC brands earn, they have about $1.50 in debt,” said Lesley Hensell of Riverbend Consulting,an ecommerce consultant who advises brands on how to grow sales and reduce risks on Amazon and other platforms. As interest rates rise, that debt is becoming a lot more expensive. And suddenly investing in companies that have lots of ‘promise’ but no profits is no longer appealing to investors. For brands large and small the message is clear: Profit or perish. <h3><b>No More Free Lunch</b></h3> One of the first things to go is staffing. This has led to a round of layoff announcements from Rent the Runway (USA), which announced that it is cutting 10% of headquarter staff, to most recently Pomelo (Thailand) that said it would reduce its headcount by 8% as it looks to raise more capital. The startup in August secured about $10 million from existing investors including Jungle Ventures, regulatory filings showed, and has raised a total of at least $83 million from investors including JD.com Inc. and Provident Growth Fund. <h3><b>Amazon Rollups Start to Rollover</b></h3> In 2021 funding for rollups (companies that aggregate Amazon startup brands) jumped to $12 billion, from $1 billion in 2020, per the Financial times. In 2021 funding has fallen to $2 billion. At the same time, around 87% of companies that IPO’d in 2021 are trading below their initial offering price. Clearly there's growing reason for investors to feel less confident in when they might see a return - or even if they will <i>ever </i>see a return on their money. <h3><b>Southeast Asian Startups Hit a Speed Bump</b></h3> Many of Southeast Asia’s e-commerce companies are facing slower growth as macroeconomic conditions sour and consumers pull back on spending amid rising inflation. Sea Ltd.’s commerce arm Shopee in June made its first major job cuts and is scaling back its overseas footprint. The Singapore-based giant has lost almost $170 billion of its market value since an October high on questions about its money-making prospects. iPrice Group (Malaysia), Southeast Asia’s leading e-commerce platform helping shoppers find the best deals online, is laying off 20% of its staff. It comes three months after the company announced a $5 million investment from Japanese Conglomerates Itochu Corporation and KDDI Corporation. Over the years, iPrice expanded the business from its website to offer a full-suite white-label marketplace solution for super apps, including BNPL providers and recently started building its app to capitalize on the 100mn+ users who visit iPrice websites every year. “Whilst we proved these new services all resonated with online shoppers, they each required further investment with a longer-term payback. In today’s uncertain economic environment, it’s important to be hyper-focused on the company’s core product,” said iPrice Group Co-Founder David Chmelar.