Awarded the
“Rodinstar” Post
of the week!!
There was an interesting article on cnet about companies that made the loudest noise, and fell the hardest, during the Dot Com Bubble. A few of them are:
Webvan
In a mere 18 months, it raised $375 million in an IPO, expanded from the San Francisco Bay Area to eight U.S. cities, and built a gigantic infrastructure from the ground up (including a $1 billion order for a group of high-tech warehouses). Webvan came to be worth $1.2 billion (or $30 per share at its peak), and it touted a 26-city expansion plan. But considering that the grocery business has razor-thin margins to begin with, it was never able to attract enough customers to justify its spending spree. The company closed in July 2001, putting 2,000 out of work and leaving San Francisco’s new ballpark with a Webvan cup holder at every seat.
Kozmo.com
Kozmo.com was cool and convenient. You could order a wide variety of products, from movies to snack food, and get them delivered to your door for free within an hour. It was the perfect antidote to a rainy night, but Kozmo learned too late that its primary attraction of free delivery was also its undoing. After expanding to seven cities, it was clear that it cost too much to deliver a DVD and a pack of gum. Kozmo eventually initiated a $10 minimum charge, but that didn’t stop it from closing in March 2001 and laying off 1,100 employees. Though it never had an IPO (one was planned), Kozmo raised about $280 million and even secured a $150 million promotion deal with Starbucks
Razor thin margins, growth-focus, not-profitable-at-net-level, huge potential – does this ring a bell? These are words that link the e-com news stories of today with the failed Dot Com Companies of the 2000s.
“Hardly a fraction of the people of India are using the Internet today. We are just scratching the surface,” says the twinkle-eyed, dreamy entrepreneur of today.
But does it justify the lack of fundamentals in a business? We all are chasing the big golden hen that is India and its 1billion people, waiting for the golden eggs to fall in our hands. To chase the hen, we have created huge and hungry monsters, and unleashed them on the poor hen. We feed them with money, because we all want our monster to race ahead of the others. But what happens when it catches the hen, tears it apart, and turns around to look back at you. No more hen – no more golden eggs. How do you now feed the monsters you have created?
Who are these monsters? These are the companies without fundamentals. When Warren Buffet invested in Yum Brands (KFC, Taco Bell, Pizza Hut) he saw a cash-making machine; a company not affected by depression; good margins; positive cash-flow; steadily growing demand; a company whose future is not affected by the whims of the stock market. Yum was a company with fundamentals. Our monsters don’t have fundamentals.
We have created huge companies, but can we manage them? The internet is full of stories about companies who couldn’t deliver what they promised. XYZ-kart is too busy chasing their x-crore target – they don’t give a shit about your Rs 100.
Some personal anecdotes:
- I placed 5 orders with TastyKhana (local restaurant, free deliver) in the past 2 months. 4 orders were cancelled because the ‘restaurant-wala-bolta-hai-aapka-ghar-duur-hai’ or ‘restaurant-wala-bolta-hai-minimum-300-ka-order-chahiye’. For the fifth one, I was asked to pay more than what their online price told me I had to pay. “We can’t do anything,” the customer support said, “They revised the menu and didn’t inform us.”
On the other hand, take Domino’s. I have placed over 20 orders with them in the past 6 months. No problem with any order. And every single order delivered within 30 minutes. These people know their business. - Having recently moved to a pre-paid connection, I tried FreeCharge. The transaction failed twice. I wasn’t worried. “Where will the money go? It’ll come right back into the bank account”. Well, it didn’t. Apparently, they give us a text box to enter the recharge amount, and when we enter a number, they cancel our transaction, keep the money in an online wallet, and say, oops … that recharge amount is not supported. I can’t take my money back from the wallet – I have to spend it on their site. I say, Why not use a dropdown box dipsh*t, and tell me the valid amounts, like the official Vodafone recharge portal?
I think I’ll stick to Vodafone recharge. You can keep your goibibo coupons. They’re dime a dozen anyways. - I loved ordering from Flipkart. The service is good, and delivery fast. Unfortunately, 3 out of the last 4 electronics I ordered from them had to be replaced because they were faulty. Good service can’t compensate for this.
All these companies we are building – can we even manage them? Everyone wants an e-commerce pet for themselves. I am becoming a more cautious using my card on the net. I don’t think you can handle the money.
asha chaudhry
i really enjoyed reading this one nishant….
keep writing!!!
Nitish Mehta
I always Believe Website banana(Not kela , i mean to make ) assan hai , chalana Muskil ..!!
Satyen Sawant
Bang on target !! We often are trying to reach for the stars without exactly knowing what we’re gonna do once we reach there !!
Natwar Maheshwari
the title made me come to the post and I am happy I did..nicely written..
Rajiv Lulla
jab chalana mushkil hota hain, tho customer & investor ko kela (banana this time) lagta hain…LOL 😉
DEEPAK DUBEY
enjoyed reading too…..
Deap Ubhi
Hey Nishant, Deap Ubhi here, and I work for FreeCharge. First of all, thanks for taking the time for the quick review of your experience. Here are my $.02, for what it’s worth:
# Recharge Plans – yes, you are absolutely right. Today, the expectation that the user knows what denomination they want to recharge is a flawed one and we understand this. Our new experience will promote plans in the user’s journey to a more central role; we have access to a rich data pipe of plans now, and we look forward to surfacing this information for our customers.
# Wallet – honestly, this was more driven by empirical feedback from our own customers. Over 97% of our own customers who had gone through our previous refund flow told us they did not want a refund. They wanted their recharge. The easiest way for us to provide that as a service without blocking funds and then relying on the PG to reconcile it with the bank (which can take days or sometimes weeks with certain PSUs) was to have the money flowing back to a digital wallet. Having that said, where I agree with you is that we should let the user decide; our next iteration will provide that option to customers.
Sorry for the frustration we caused. We hope that our next few iterations will remove some of these user pain points that you experienced.
Thanks again for writing about us.
Nishant Agrawal
It’s good to hear from the company. The concept of a wallet isn’t flawed, as long as the user isn’t forced into it. I had an issue with something I bought from Flipkart. When I asked for a refund, their rep asked me if I wanted a direct refund, which could take weeks, or a deposit in the wallet. I told them I wanted a direct refund, and 10 mins later I placed another order with them. While I was pissed off because the product didnt work, I still trusted them with my money.
If you have my trust, you have my order.
There was a time when I used FreeCharge even without ordering coupons. I liked the interface and ease. These were the pre-textbox days.
Alok Rodinhood Kejriwal
Its an honor to have Deap Ubhi on this thread. For those who may not know, he IS the founder of Burpp.com that was acquired by Network 18.
Thanks Deap for being here!
Praveen Prabhu
Bang on.I do agree with freecharge guy. Even at my previous workplace, customer’s wanted recharge & not refund. But the difficulty of settling a refund is far more cumbersome & takes too much of time.
Deap Ubhi
I don’t want to be presumptuous, but we’re confident we’ll win you back, Nishant. Stay tuned.
Deap Ubhi
A super humbling induction, Alok. And let’s call a spade a spade dude. It was more of an acqui-hire for some chump change :-P. Happy to be here!
Deap Ubhi
While that is what our primary research showed us, Praveen, there is no harm in handing that choice to the consumer. Let them decide!
Nishant Agrawal
To be frank, I wasn’t interested in a refund. I also wanted the recharge. What troubled me was the fact that a choice was taken away from me 🙂
asha chaudhry
hey nishant,
take a look at the top of your post!
Nishant Agrawal
Aw, this is great. Thanks!
Aman Jha
Hi Nishant,
Good post and good insight into ecom scenario.
You can play role of Devil’s advocate for ecom biz very well.
I recommend aspiring ecom entrepreneurs should consult you,so that you can help them bust their misconceptions.
Regards
Harsh Bhatia
Paytm offers both the options and just knowing that they offer you to refund, they have won my trust. You should implement this option at the earliest just to win trust. People might or might not ask for refund (nor did i when my recharge failed at Paytm) but that small option over there for a refund assures customers that the company cares about their opinion 🙂
P.S – I have used both Freecharge & Paytm. Both are at par but I started transacting more at Paytm bcoz of their Android app 🙂
Deap Ubhi
We’re on it man. Thanks for your feedback. We understand there is a comfort factor there, and if that will be a “sticky” factor for customers, we most certainly will do it. And on Android, just wait and watch…not long now.
Amol Ghemud
lets hope we learn from there mistakes and try not to reapt it again…
Harsh Bhatia
Waiting…, yours was the 1st website where one could recharge with ease, all the best 🙂
Sahil Makhija
Interesting insights particulary on Freecharge discussion.I am currently working on starting up an e-commerce portal of the domain i understand and the focus will be on per-transaction profitability .To my basic business mind,it seems logical to earn something on whatever i sell for me to keep doing what i love doing.
Why does it feel so contrary to the existing e-com landscape in India.Every e-com company big/small aims to gain a share of the growing pie (As more indians get internet and we dig deep after scratching the surface of 10m users).Get the users,profits shall follow is the Mantra of India e-com and everyone needs big pockets/monsters to support such strategy with the hope that there is light at the end of tunnel.
Does that mean that the investors might sooner/later ask for per transaction profitability forcing the e-commerce companies to re-evaluate costs of delivery,customer acquisition etc.It took Dominos 15 odd years to establish foothold in India. before getting the tremendous growth it has.Its relentless focus on after mastering the product as per Indian taste,mastering the art of supply chain and Advertising to change consumer mindset has seemed to paid off.