Top 3 reasons for downfall of Flipkart and Snapdeal!
Indian startup eco-system is facing a challenging time. Flipkart and Snapdeal were the frontrunners in the rise and are pioneers in this phase as well.
Diksha Gupta, TechGig.com
The startup ecosystem in India is undergoing a correction phase. Flipkart and Snapdeal have handed over pink slips to many employees. In the past, Flipkart had gone on record to admit thatthis move was triggered by hiring mistake (although that report has been taken down now).
Investors are also watching their steps while investing in Indian startups. While it would be harsh to say that the startup party is over in the country, we can definitely say that the
While most IT companies and tech startups are slashing their workforce, Bhavin's company Directi has announced to hire over 1000 people by 2016 end. Bhavin feels that Indian startup scene could have been better if players like Snapdeal, Flipkart and PayTM would have taken certain steps. In an exclusive conversation with TechGig.com, Bhavin shares what went wrong with premier Indian startups. Here are his thoughts:
1. Indian startups are simply copycats:
One big problem with Indian startups is that very few companies, especially the big names, are true innovators. All they have done is picked a model that was working in the US or Europe and replicated it in India. They put in a lot of funding in those models too. It is bit disheartening to see as all the innovation take place elsewhere and India is simply copying the stuff. This copying approach has worked really well in China as they are a guarded market. The government of China has not allowed a single foreign player, whether it is Google, Facebook, Amazon or Uber in the country. They have completely banned forign players and have created their alternatives. However, India is an open country and players like Amazon, eBay, Uber have freerun to come and compete here. Thus, a simple copycat strategy will not work for long.
2. Their products don't add true value for a consumer:
Not only have these companies decided to skip innovation, their products do not deliver true value for a user or a consumer. This is visible because even after years of existence, they have to incentivise the users to survive by giving them extremely high cash back or rewards or high discounts. If a consumer comes to me for a product that costs me Rs 100 and I have to give him Rs 25 cash back to buy my product, there is definitely lack of value in the commodity I am trying to sell.
I can understand if a company engages in this practice at an initial level, to attract the customer to a new medium. However, if a company has to keep giving cash back and discounts, how will they eventually survive? Last year I read that Ola made Rs 700+ crore loss against Rs 350 crore profit. It means that I have to give two products free to someone who buys one unit of my product.
Companies need to ponder in such case if their product is really as bad? Therein lies the biggest problem. If a company has to throw so many offers for customers to buy its product and has to eventually sell it at a loss, it may want to rethink about the quality of the product. Instead of pumping money on research and innovation and creating value, the Indian startups are spending on such practices of winning the customers. But eventually, they are losing on their profitability. This is an unhygienic trend and any company doing this is focusing on a wrong variable. In many cases, it is not the owners but the investors who are to be blamed. They push the startup founders to get more users.
3. Bad hiring:
Hiring right is critical for any company to survive. Companies like Flipkart have fired people tagging them as underperformers. It is due to the incorrect hiring practices that the companies end up hiring underperformers in such large numbers. If Amazon has been able to replace Flipkart because of its customer service and brand recall value, it is because of the kind of people they have hired, who have helped build a brand. At Directi, we have set our standards high when it comes to hiring people. We do not want to regret at a later stage.