1Fit Malaysia closure: Why marketing without a margin puts brands at risk

When 1Fit Malaysia announced its abrupt shutdown on social media five days ago, it left behind a trail of confusion, frustration and unanswered questions. The once-promising fitness subscription platform said it would begin formal liquidation as of 13 June, citing insufficient funds.

In a short video statement, Murat Alikhanov (pictured), the founder and CEO of 1Fit said that the company paid out over US$1.2 million to studio partners. Despite hitting 356,000 completed workouts and onboarding over 600 gyms and fitness studios, 1Fit could no longer sustain operations as it had allocated US$4.2 million for marketing and hiring qualified specialists, he said. 

"We generated US$2.7 million in sales, and you can quickly figure out that the math doesn’t add up. We tried to make the numbers work. We tried to raise more capital. We explored every option to keep things going, but in the end we couldn’t secure the funding we needed to continue. This is not how we wanted the story to end," Alikhanov added. 

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The collapse of the business sent shockwaves through its ecosystem. Customers flooded Instagram with complaints, demanding clarity and refunds. Studio owners are reportedly still awaiting overdue payments, while internal staff members were allegedly blindsided by the sudden announcement. The comments section on 1Fit’s social channels paints a picture of a brand that once inspired enthusiasm, now struggling to contain reputational fallout.

Social listening by DATAXET Nama Malaysia showed strongly negative sentiment (95%), with netizens frustrated by financial losses and scam concerns. Many have also compared 1Fit to past gym scandals. Only a few neutral comments (5%) discussed alternatives such as ClassPass or raised broader questions about industry regulation.

Key themes from online discussions include financial loss and refund demands (32%), claims that 1Fit’s prepaid model was a scam (28%), criticism of its unsustainable business model (15%), and support for ClassPass as a more reliable alternative (12%). Some also called for stronger regulation to prevent similar collapses in the fitness industry.

The key themes also appear in the word cloud provided by DATAXET Nama:

Balancing marketing and commercial viability 

1Fit’s collapse highlights more than just financial woes, it underscores the danger of marketing, a dream the business model can’t support. Touted as a flexible, community-driven fitness alternative, 1Fit’s brand promise ultimately outpaced its financial reality, prompting the question: Can strong marketing sustain a weak business?

One thing marketers can’t afford to overlook is budgeting. Kathryn Saw, founding partner at NC Marketing and Advertising, told A+M that while it may not be the most glamorous part of the job, ignoring it can lead to fast trouble. “That 10 to 20 percent marketing budget rule for B2C only works if you’re accounting for everything. Not just ads, but gym payouts, onboarding, and support. The whole ecosystem,” she explained.

Saw added that while 1Fit’s promotions might have looked attractive on paper, they were doomed to collapse if delivery costs weren’t factored in. Marketers, she said, need to know when a brand’s promise no longer aligns with reality and avoid overpromising beyond what the business can support. 

"When growth becomes a problem, that's your first warning sign. If a campaign takes off and the team is suddenly scrambling to support ticket spikes, or when partners start complaining, it means marketing is running ahead of what the business can actually deliver," said Saw. 

According to Saw, marketers are here to translate the business into something people can understand and trust, not "stretch the truth until it snaps". She added: 

If the business can’t support the message, it's time to either rewrite the message or rethink the offer.

Similarly, Laura Wong, founder and marketing director of social media marketing firm Our Stories Lab said that a business' ultimate goal should be sustainability not virality. Wong has seen websites crash or stores run out of stock because the backend couldn’t keep up with the hype.

In fact, marketers need regular check-ins with operations, finance and supply chain teams before launching any major campaign. They should always be asking whether the business can sustain the demand they are about to create, and if margins and cash flow are strong enough to scale. 

At the end of the day, marketing can bring people to the door, but it’s the business that has to deliver the promise. If the business can’t keep that promise, the fallout isn’t just short-term, warned Wong. Rather, it is trust lost, which is much harder to rebuild. 

Wong added that marketers today need strong business acumen to succeed. “I always tell my team: don’t just think like a marketer, think like a business owner. Understand the numbers. Know your margins, your cash flow runway, and your supply chain constraints.”

“For example, if your pre-tax profit margin is under 10 percent, you might not have room for big campaigns, you will have to fix your pricing or cost structure first. If your cash flow runway is under six months, hold off on splurging on key opinion leaders (KOLs). Start with founder-led organic content or a lean paid media strategy. And if your supply is shaky, run your campaign in controlled phases instead of going all out," she said. 

The PR implications of 1Fit's exit

As news of 1Fit Malaysia’s closure broke, LinkedIn users from legal experts to business leaders, quickly pointed out this wasn’t the brand’s first abrupt exit. The Kazakhstan-based company had previously shut down operations in Mexico under similar circumstances. With two sudden closures on record, can 1Fit realistically recover from the reputational damage?

According to Leon Tang, senior partner and group COO (Southeast Asia) at SLPR Worldwide, what matters isn’t just the failure, but how a brand handles the fallout. “In today’s hyper-connected world, how a brand handles disaster often matters more than the disaster itself,” he told A+M.

While 1Fit responded promptly with a public statement and video from its CEO, Tang noted that the effort was undermined by poor crisis planning. Internal stakeholders were not informed ahead of time, with gym partners reportedly still promoting memberships hours before the news broke. “This poor coordination transforms potential allies into critics,” he said, adding that: 

More damaging was the absence of actionable next steps. In crisis communication, empathy without execution is worthless.

There was no clear refund process, no payment timelines for partners, not even basic support contact information. “When your business model collapses, your communication strategy becomes your last chance to preserve some dignity, and 1Fit squandered that opportunity,” said Tang. 

A+M has reached out to 1Fit for more information on their liquidation.

For a brand such as 1Fit which built itself on values of community and accessibility, failure to communicate in a way to match those values, can feel like betrayal to users and partners. “What’s crucial in moments like this is not just what you say, but how comprehensively you address the ecosystem you helped build,” said Ashvin Anamalai, CEO of DNA Creative Communications.

He also said that the repeated exits across markets signal a deeper issue, shifting perception from "an unfortunate situation" to a "flawed business model". He added: 

Brands can come back from failure, but not from denial, deflection, or silence. Rebuilding begins with owning the full weight of the past.

Brand recovery starts with clear, human, and action-oriented communication, even if not all the details are available. "Sharing what is known and when more will be communicated, helps manage uncertainty," said Ashvin. That communication should also be followed by support channels, tailored messages, and visible efforts to resolve issues.

Meanwhile, Tang concurred, adding that 1Fit would need more than cosmetic rebranding for true recovery. That would mean complete operational and governance transformation, as well as transparent financial reporting, and new leadership. 

Future Southeast Asian expansion would also be difficult, as consumers will uncover the Malaysian collapse instantly. “From a Malaysian market perspective, recovery is essentially impossible,” Tang concluded. “The contrast between 1Fit’s aggressive recent marketing push and its sudden disappearance has created a credibility gap that’s unbridgeable.”

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