EL MONTE, Calif. — GigaCloud Technology is answering claims made in a recent report by short sellers Grizzly Research, with CEO Larry Wu and President Iman Shrock telling Furniture Today that they arise from a misunderstanding of the company’s B2B supplier-fulfilled retailing model.
The report accused the company of misrepresenting website traffic on its B2B marketplace in addition to manipulating its top-line revenue growth using undisclosed transactions with third parties.
Grizzly claims that GigaCloud’s B2B marketplace only receives “approximately 50 visits per month currently.” GigaCloud’s response noted that the research is misleadingly citing third-party search engine traffic data, or “organic traffic,” and confusing this with the total number of website hits.
When GigaCloud’s reported traffic numbers are cross-referenced against publicly available website analytics tools, their true number of hits for April 2024 is near 130,000.
The claim of undisclosed transactions with related parties is also addressed in GigaCloud’s response. “Buyers in its marketplace can list products for sale to consumers on their own stores or other ecommerce websites, and GigaCloud will handle fulfilment directly to their end customer. These transactions represent legitimate sales that can be validated,” through the companies filings and records of fulfilled order, the company’s response reads.
The short seller report alleges that these off-platform e-commerce sales mean that GigaCloud is actually a “B2C furniture reseller.” Wu stressed that, although it is fulfilling orders directly to the end consumer, its model is about creating a more efficient supply chain, and that they never sought to hide third-party involvement, which is an integral part of their model.
“Some don’t really understand that in our supplier-fulfilled retailing model, we do business with the reseller, but actually we fulfill directly to the consumer. If anything went wrong in that (chain) the public would know because there are so many people involved. 10s of thousands of individuals are receiving their items,” Wu explained. “But the report’s central misunderstanding is that we don’t do just the fulfillment, we are continually working to better manage the supply chain.”
The company’s SEC filings appear to bear out these claims. GigaCloud has indeed disclosed third-and related party involvement, both of suppliers and in contracting out warehousing services (answering another contention in the report that the company “lacks warehouses.”)
Shrock stressed that GigaCloud is working to give suppliers more opportunities and points of entry to sell to consumers, a disruptive model that aims to “better improve the supply chain and get product to consumers in a more efficient way.”
GigaCloud’s response also noted that the short seller report makes no claim as to its truth or authenticity, and that it “reserves all rights to take appropriate measures to defend itself against attempts to manipulate the market for its stock and to safeguard the interests of its shareholders.”