Startup Firing – How to Avoid

Startup Firing – How to Avoid

“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” – Richard Branson

Since last couple of years, Indian startup eco system is experiencing a roller coaster ride. With huge funds flow, a lot of new business models got introduced in the market that are facilitating consumers over conventional ways. On the other hand, due to factors like market competition, cash burnt strategies, profitability constraints etc, a lot of startups are either struggling to survive or pivoting their business model. As a result, firing has become so much common phenomenon among startups that their credibility is questionable, not only in terms of career choice but also in terms of consumer trust.

Snapdeal, Zomato, Commonfloor, Tinyowl, almost all of the major players of Indian Startup eco system are in the list of companies that have fired their employee in the name of organizational restructuring, performance issues etc. Nobody would love to keep searching suitable job within short span of time or remain occupied 24*7 with the fact that there is need to look for another job. Also, the founding team would not love to remain stuck the concerns like excess manpower.

So there is urgent need for startups to look into manpower planning aligned with the need of business model, scope of work and funds in-hand. Here is an analysis from FS Labs to give a direction to startup founders to think in a better manner rather than firing.

Why Firing happens in Startups

As explained in our previous analysis “Startup Hiring and Firing”, manpower reduction is a natural phenomenon between growth and stability phase. During growth phase the requirement of manpower goes on higher side because of fluctuating demand, operational instability, lack of automation etc. These factors start getting resolved with progression of time, hence, as a result the manpower requirement reduces considerably during stability phase. So if the manpower expansion is not preplanned, it will lead towards firing for sure at later stage of startup.

Another factors like unplanned expansion, wrong recruitment, performance related issues etc also contribute in the acceleration of firing at startup. Generally after getting funding, startups try to capture the maximum market volume by expanding into different geographical locations and business verticals rather than focusing on achieving operational excellence. This premature expansion generally disturb the optimum planning of manpower and results in excess of employees at startup. So to overcome the financial breakdown, startups find the easy solution of firing.

Short and Long Term Impacts of Firing on Startup

Firing in startup not only affects the employees (who got fired) in terms of new job search, justification, mental stress, but also affects the startup in short and long run. Here are major impacts of firing on startup –

  • Reputation of company in terms of career choice of job seekers hence making lesser probability of skilled resources in future.
  • Reputation of company for consumers. A company that can’t take care of its internal consumers, how it shall be able to meet its external consumers’ expectations.
  • Motivational involvement of remaining employees to perform with their 100% efficiency. People start looking for another available options in the market hence start giving less importance to the desired work.
  • Brand name degradation for associated stake holders like service providers, suppliers
  • Resource limitation for other players of same domain. Consumers, job seekers, vendors and other stakeholders start losing confidence is the same concept.

How to Avoid Firing in the Startup

While rapid expansions along with different experiments (different business verticals and services) are the need of time to survive in the competitive market, manpower expansion is majorly dependent on the possibilities of success of experiment. Though possibility of market acceptance of new startup concept can be anticipated based on the feedback surveys, market demand/ trend etc, the true results come from real time execution. So the expansion of man power must be done with backup plan of failure of experiment, otherwise it would have high possible of firing in recent future.

Since the impact of firing is projected on long run trajectory of startup, it’s better to play safe game to avoid the same. Here are few tactics from FS Labs to avoid the same –

Startup Firing - How to Avoid

[A] Optimum Manpower Selection – Responsibility Sharing

Requirement of manpower is directly proportional to the scope of work that needs to be done for execution of startup. Higher the work packages, higher shall be the requirement of manpower to meet the defined time baseline.

  • Areas like engineering, finance etc where the manpower can easily be made completely occupied are the safe zone areas to recruit / expand manpower.
  • On the other hand, areas like service, management, customer support etc which are dependent on the extent of operational need are the crucial areas to expand in terms of manpower.

So balancing is required between both of the zones for safe game.

  • At initial stage, the limited work packages can easily be managed by sharing the scope among the small founding team.
  • At experiment phase, when limited visibility is there regarding the acceptance of concept by mass, there is no point of expanding the work force.
  • At growth phase, when clarity starts coming into picture separate responsibilities can easily be assigned.
  • Till the stability phase arrives, optimum level of manpower should be maintained to avoid the gap between stability vs growth stage.

Keeping manpower at optimum level will add some extra responsibilities to the existing team but can easily be managed in terms of extra benefit to the same team rather than recruiting new team.

[B] Minimal Liability Criteria – Outsourcing

Liability associated with manpower is not just the money, but the assurance of 100% utilization of their skills and time. With increase in man power of the company, liability increases in term of money, utilization and responsibilities. So one simple approach to keep this liability to minimal level is to outsource the work packages –

  • Work scope which can be defined in terms of man hours could be outsourced to squeeze the outcome response time as well as liability. eg – Engineering work could be outsourced based on the man hours associated with it.
  • Work including full time involvement of dedicated manpower could be outsourced based on the number of person required. Eg – Service operation work could be outsourced based on the number of operators required.

Outsourcing is beneficial as it doesn’t give much liability to startup. Any manpower outsourcing consultancy having contract with different startups/ companies can easily manage the fluctuating demand of startups.

[C] Short Term Experiments Approach – Internships and Contracts

Another approach that startups can utilize to test the acceptance of their experiments is to recruit interns and contract based employees with an aim to get the anticipation of market response and then expand if seems beneficial in long run.

High energy level of college students will definitely help in speeding up the process as compared with standard approach and hence the decision making. Limitation with interns is of their limited knowledge base that can be mitigated by giving short training to them. Another limitation is the availability of inters at specific time spans only.

Contract based freelancers might be better as compared with college students in terms of knowledge base but their motivation level is questionable with respect to fresh mind. Limited time span availability of interns can be mitigated through contract based manpower.

[D] Utilization in Other Work – Market Survey, Feedback, Development

Above mentioned approach are to be implemented since the start. If the situation arises where manpower exceeds the requirement, instead of firing them at once or paying them notice amount is not ethical as well as logical. Since company has already invested so much in them, there is no point of just letting them go.

“When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.”Simon Sinek

Spending around 50-60% of the active time per day in company, every person become emotionally attached with it. When the situation of company is clear to every employee, few tries to play safer game and switch the company, while few still remain attached with the hope of success of the company.

So their motivation can be utilized by following –

  • Market surveys to understand the demand of consumers wrt to what is going wrong with the existing setup and accordingly changes can be made.
  • New business verticals that can bring fruitful results to the company.
  • New experiments to enhance the business model and revenue.
  • Why not to motivate employees if they have any new concept in their mind and are not able to startup with.

Firing may seem a good solution with paying some additional amount of money to settle the small liability, yet considering the impact on reputation and the loss of opportunity, it’s better to recruit aligned with the optimum need.

Though it’s difficult to develop a fool proof strategy to avoid firing in startup at any stage as it is a result of different parameters, safer strategies could easily be developed to avoid the same up to maximum extent.

Wish you luck for your startup. Stay tuned with FS for more updates.

Logistics Startup – Generic Analysis

Logistics Startup – Generic Analysis

With increase in number of e-commerce players, hyper local delivery, on-demand services etc, the scope of logistics is getting increased day by day. Escalation in smart phone users is making the logistics services in more demand. With increasing demand from Tier II and III cities, enhanced logistics services are the need of today market.

As per the “Logistics Market in India 2015-2020” by Market Researcher Novonous, the logistics industry is worth $300 billion and expected to grow at a CAGR of 12.17% by 2020. With such huge figures in hand, Logistics give a huge scope to entrepreneurs for improvement of existing way of working and developing their business model. This is because of increase demand of e-commerce players that in Jan’16 India Post reported a massive 900% jump in Profit.

If you are planning to start a logistics startup, like Delhivery, LogiNext etc, here is first cut planning from FS Labs for the same –

Logistics Startup Generic Analysis

[A] Market Study

Demand and Supply Study of Market – Every business model is driven by the demand and supply principle – higher the demand, higher is the need of supply. Any business domain saturated with respect to the demand is not a good idea unless the new model is strong enough to penetrate and sustain the market volume of other players.

So the first thing that needs to be studied is the demand of external logistics player in the domain that you are targeting and the geographical area where you are initiating your business model. For eg – If you are targeting international logistics domain of goods, a lot of shipments travels between India and China, so a solution of full or partial container load combined with the packaging solutions is a good business idea. If you are targeting last mile delivery, food, grocery, other goods could be a good idea based on the demand in your selected area.

The benefit of “demand and supply study” is that gives the possibility of survival in the market.

Market Size Assessment – A business model fulfilling the need of mass has high probability of success – more the potential customers; more are the chances of market acceptance. Market size assessment is a combination of potential market for the business concept & established market base of existing players and hence the resultant penetrable market base.

So the study that is required is the estimation of market size. For eg – If your startup is based on last mile delivery of goods in some specific area and few other players are also working in the same domain, the market available for you is the difference between potential consumer base and already established market for other players.

Once the market size is estimated, you can easily decide the other strategies like marketing, customer acquisition based on the type of consumers you are handling.

Market Competition Analysis – Biggest challenge in front of any startup is the market competition that it is going to face. Small players give challenge in terms of their loyal consumer base while biggies give competition in terms of cash burn. So it’s essential to understand the market competition from direct players and well as indirect competitors. Direct competitors are the players of same domain while indirect players are the biggies getting diverse.

If your logistics business model is based on the goods delivery combined with the ordering facility as well, every small shop providing the home delivery service on phone call becomes your competitor along with the e-commerce players serving that area.

The benefit of knowing your competitors beforehand is that you can easily decide the strategies to handle them. Small players can easily be handled by achieving operational excellence while biggies require additional planning.

[B] Business Case 

Revenue Model Analysis – Ultimate aim of any business model is to earn money. If the profit margins are good enough, moderate volume is sufficient to keep the cash flow balanced but if the profit margins are small, it’s necessary to optimize the process in terms of operations and cash flow.

So for the logistics business model its necessary to estimate the cash out flow – fixed as well as variable, and cash in-flow that is generally based on the commission per transaction. Based on the type of logistics business, you can decide the fixed and running cost and estimate the cash-in per transaction and minimum volume required.

Additional ways of making money should also be evaluated to implement that at initial stage self or at later expansion phase. For example – logistics business model can be enhanced with following solutions –

  • Packaging Solutions with Advertisement on it
  • Inventory Management Solutions
  • Related Services

Marketing Approach – Next step is to analyze the marketing strategies to reach and convince the identified potential consumers.

For example – if your logistics business model is based on the last mile delivery of goods, you can reach to the concerned stores by mail or direct interaction and convince them to be your customer. If your startup is providing the international logistics solutions, the companies whose supply chain is dependent on different geographical locations, you can reach to the concerned supply chain personnel and convince them about your business model.

In case of logistics startup, it’s better to get some customers on-board prior to execution so that the efforts of execution should not waste in search of consumers.

Customer Acquisition Tactics – To acquire consumers, you can offer some discounts at initial stage or can provide some additional solution free of cost or at reduced price and increase the same once start capturing the market.

In highly competitive market, it’s essential to know the customer acquisition tactics of your consumers and the behavior of your consumers. So the final outcome would be the resultant of these two factors.

Scalability Analysis – Scalability check is the next essential element of pre-study of startup viability. Startup concept can be scaled to other product range, business verticals, locations etc. Business model with limited scalability has problem of

Simple logistics startup is scalable in terms of services and locations. Based on the funds and other resources available you can decide the scalability of your logistics startup –

  • Delivery Planning and Management Solutions – Optimization of delivery flow, real time tracking and communication flow, tracking of missed and pending deliveries etc.
  • Inventory Planning and Management Solutions – Demand forecasting, consumer analysis, inventory allocation etc.
  • Other Related Services – Reverse logistics management, call center support, after sales support etc.

Benefit of having scalability plans is useful for future growth – if plan A doesn’t work, you can easily move or combine the next.

[C] Resource Requirement

Team Requirement – A proper team with all the required skill sets is essential for startup. So first the need of skill-sets should be mapped for the required scope of work, and then based on those skillsets you can select the right team for your logistics startup.

For logistics startup, following skill sets are required to execute the plan –

  • Coder – to design the online portal for related transactions (if concept is web or app based), other related tools development
  • Marketing Ninja – to convince the potential consumers
  • Manager – to manage, optimize and run the show
  • Fleet Runners – to execute the logistics business

Funds Requirement – Funds are required to execute the business plan. So based on the resources required to perform the defined activities, funds requirement can be estimated.

For logistics startup, cash including verticals are as follow-

  • Office Space
  • Operational Cost
  • Manpower Cost
  • Other fixed cost – like running fleet, other equipment etc.

Fleet Requirement – Based on the type of business model, aggregator or individual, first or last mile delivery, you can decide the vehicle fleet requirement for your business model. If you have sufficient funds, you can develop your own fleet otherwise engaging a service provider is a good option.

Wish you luck for your startup. Stay tuned with FS to know more.

Better 1mg

Better 1mg

Due to increased health care awareness, research and development, enhanced services and increasing expenditure by public as well as private players, health care has become one of India’s largest sectors – in terms of revenue generation as well as employment. Healthcare sector comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.

As per the report of India Brand Equity Foundation, the overall Indian healthcare market today is worth US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a Compound Annual Growth Rate (CAGR) of 22.9 per cent. Healthcare delivery, which includes hospitals, nursing homes and diagnostics centers, and pharmaceuticals, constitutes 65 per cent of the overall market.

Such a huge potential in the sector is attracting entrepreneurs to align the unorganized market and develop their business model. Practo, 1mg, Zoctr, Care24, Zozz etc are some of the known names of health care startups. So, If you are planning to develop health care startup, here are few thoughts from FS Labs considering existing setup of 1mg as base for the analysis –

Existing Setup of 1mg

Existing set of 1mg includes a lot of simplified process that helps consumers to fulfill their health care need. Simplified process of buying medicines rather than roaming around is attracting consumers and investors towards 1mg –

[A] Medicines – E-commerce setup for medicines along with the relevant details like use of medicines, common side effect and substitutes available so that consumer can select the cheaper medicine of same composition

[B] Labs – Simplified setup of getting the prescribed tests and health checkups done as a home pickup service

[C] Ayush – E-commerce setup for homeopathic medicines along with the recommendation of medicines based on disease

[D] Doctors – Directory portal of nearby doctors categorized based on specialization along with the booking facility

[E] Articles – Knowledge base of health care in form of articles

But to make it a one stop solution for consumer for all of their health care needs, the areas which are still untouched in health care by 1mg need to be covered as well.

FS Labs - Better 1mg

Health Care Need – From Consumer Point of View

One of the easiest ways to analyze the existing business model for current market acceptance and further scope of improvement is by thinking from consumer point of view. What is the need of consumers? What are the options available with consumer to fulfill the need? How does consumer select the best fit choice? Answer to these basic questions gives a frame work for scope of improvement in existing setup as per consumer need.

To analyze the scope of betterment in existing setup if 1mg, every single need of health care can be categorized in following –

 [A] Urgent Needs – Urgent health care needs include those requirements of consumers for which patient needs medication instantaneously and the patient or people attending him have minimum time for decision making. So the known options become the obvious choice in such cases.

[B] Elective Needs – Elective health care requirements are those where consumers have sufficient time to search, compare and decide the best fit option. So the survival of the fittest player becomes obvious.

[C] Preventive Health Care – A health conscious consumer generally prefers to go for a walk, gym, yoga on daily basis, take the proper diet and other preventive activities to stay fit. For this preventive health care, people prefer to do a proper research in finding the best fit gym available nearby, nutrition facts of food, daily diet planning etc. So the proactive player has the high probability of winning the race.

Better 1mg

1mg could be made better than the existing setup by taking care of all the health care needs in better manner –

[A] For Urgent Needs of Consumers – For urgent health care needs, consumer generally wishes to get the first aid instantaneously and move patient to the hospital as soon as possible. So, to cover the urgent health care needs of consumers, 1mg could be made better by incorporating following facilities –

  • Optimized service in terms of time for first Aid service to stabilize the critical condition of patient
  • Tie-ups with Ambulance to move patient to nearby or desired hospital
  • Map based exact tracking of nearby hospitals to reduce the travel time of patient (if ambulance is not being used as ambulance drivers are obviously aware of the route)
  • Quick paper work management tools for hospitals to save the time
  • Cost and facilities comparison of hospitals to help consumer in quick decision making

Other facilities like on-demand health care service can also be incorporated to facilitate consumers in their urgent need.

[B] For Elective Needs of Consumers – For elective healthcare needs, consumer generally wishes to compare the available choices on the parameters importance for him and then select the best choice. So to cover the elective health care needs of consumers, following points can be incorporated in 1mg.

  • Generalized knowledge base of disease and first aids to get more traction
  • Online consultation facility via chat, email or video calls to help people with time saving
  • Doctor recommendation based on the parameters important to consumers
  • On-demand health care service at home
  • Added facility in the conventional e-commerce setup like weekly, monthly order management system

Other facilities that can help consumers for their elective health care need should also be incorporated to make 1mg one stop solution.

[C] For Preventive Health Care – For health conscious consumers, the need is to provide the details of preventive health care tips and tricks –

  • Details of nearby Yoga, Gym, Fitness centers along with the comparison of facilities, cost etc.
  • Interactive diet plan for consumers based on age, work load etc.
  • Interactive calorie intake and required exercise monitoring tool
  • Health insurance facility as an additional service for consumers

Apart from the above betterments which are purely based on consumers need, other improvements that can be incorporated based on the other stakeholders needs are as follow –

  • Data base management tools for associated retails of medicines
  • Scheduling and management tool for doctors
  • Management tools for hospitals

By covering the requirements of all the concerned stake holders, 1mg could be made better. So if you are planning to start a health care startup, these were the few thoughts from FS to make your setup improved.

Wish you luck for your startup. Stay tuned with FS to know more.


Myntra Ditches App-Only Approach – A Bad Experiment or Market Need

Myntra Ditches App-Only Approach – A Bad Experiment or Market Need

Recently online fashion retailer Myntra announced to relaunch its website on 1 June with an expectation of 15-20% increase in its sales in the current financial year. This move of Myntra clearly highlights that the decision of App-Only model implemented in last May was not favorable for Myntra.

Last year when Myntra folded up its web operations, it claimed to draw about 90 percent of its traffic and 70 percent of sales from its mobile app. Myntra justified it’s move to consumers, “We believe fashion is a very personal experience. The best fashion experience, therefore, is a truly personalized and engaging one that is only possible through the device that is closest to consumer ie their mobile phone.”

This time Myntra gave another explanation for ditching App-only approach, “We found that while a majority of the growth is driven by mobile, the volume of users on desktop hasn’t decreased. We’ve launched a number of new categories such as home furnishing and (fine) jewellery where customers want to see the products on a larger screen. Finally, according to our data, women customers, who are a key area of focus for us, in particular, want to have the option of shopping across channels.”

Myntra Ditches App-Only Approach – A Bad Experiment or Market Need

Why Myntra couldn’t afford to stay App-Only

From an outsider point of view, here are some of the major contributors why Myntra ditched App only model and decided to re-launch its website –

  • Though the number of smart phone users has increased significantly in last couple of years, 4-5 inch screen is not suitable enough to convince consumer to make a purchase. When other competitors are giving good browsing experience to consumers, definitely Myntra couldn’t stay behind in the race.
  • When parent company, Flipkart, is quite eager to become No.1 in e-commerce domain and launch IPO, it can’t afford to drop even a single consumer. So, to sustain the traffic of website lovers, Myntra had no other alternative than re-launching the website.
  • Since virtual reality is not so developed till date, remaining App-Only based on the assumption that consumer experience will get enhanced for online shopping in future is not a reasonable justification.
  • To enhance its product catalogue in other domain Myntra needs a portal where people can easily scrutinize the products and website is unquestionably better choice than App for it.

Myntra App Only Experiment – Learning for Startups

FS Labs has comprehended the important learning from Myntra App-Only Experiment for startups –

[A] Analyze the Product from Consumer Point of View

The selection of startup setup, App or website, single product or multiple, limited domain or expended, all shall be selected from consumer point of view. Time, place and use of product being provided by the startup play important role while deciding the setup.

For example – Transportation based startups are best fitted for App only model since consumer need to book the cab mostly when out from home or office. Easily available medium in the required time is the cell phone available with user. So, App or mobile website is the best selection for setup from consumer point of view.

For products like clothing where consumer generally wish to spend sufficient time, compare the different options and taking feedback of others while selecting the product, App only strategy is not suitable.

For products like food where consumer can place order from cellphone as well as desktop, it’s good to have both, though mobile version of website can also serve the purpose of App

Extrapolating the same fact from App or Web to other parameters of product, startups must focus on selecting the best fit setup as per the need of consumer. Losing consumers just because of one missing vertical is not a good approach from business point of view.

[B] Gradual Experiment Approach

Experiments are the essential requirement to learn, develop and grow. Since any idea needs to be validated on market acceptance through prototype, MVP, feedback surveys etc, the experiment shall be done in parallel to the existing setup and then implement it on the larger scale.

Though the startups need to do experiments on their existing setup based on consumer demand, market competition and future targets, it should be gradual rather than sudden change. At initial stage when the business model and consumer base in limited, it’s easy to do the sudden experiments and analyze the consumer behavior but when the market volume is huge, extra care is required for sudden jumps.

Benefit of gradual change is that the consumer behavior can easily be analyzed and the probability of negative impact on business can be minimized considerably.

[C] Emotions have important over Numbers               

It’s always important to understand, listen and take care of consumer demands and needs. Today, one of the biggest mistakes that most of the startups make is “just go with the existing and projected numbers of sales and growth and not listen to the consumers”.

Myntra also stated for ditching App-Only approach, “It is part of the Myntra culture to try bold things. We tried to do this last year because we thought we can offer consumers a much better experience on the mobile. While that is still true that the mobile experience is far superior to the web, we have recognized that some consumers still want the option to shop on the web we’re humble enough to listen to our customers.”

It’s always important to listen to the consumer to make a loyal market volume. Supporting customer acquisition approach like App only discounts might be good to prove yourself on your own decisions but for long term sustainability, involvement of consumers in future development is indispensable.

What Next in App-Only Development

The future technological developments like Virtual Reality, Augmented Reality which are mainly mobile driven, will definitely affect the e-commerce and m-commerce considerably. People wearing VR glasses would definitely be able to feel the product just like an offline store.

But till these technologies become available to mass, existing techniques and technologies can’t be ignored. People who are addicted to desktops and laptops also needs to be taken care for business development.

Stay tuned with FS for more updates. Till then happy reading.

Peppertap Shutdown Grocery Delivery – Business Model Flaw or Something Else?

Peppertap Shutdown Grocery Delivery – Business Model Flaw or Something Else?

Recently, Snapdeal-backed PepperTap has decided to shut down its hyper local grocery delivery operations by the end of this month to shift their focus on e-commerce logistics. The decision of complete change of business model was made just after two months when Peppertap shut down operations in six cities including Mumbai, Kolkata and Chennai to deepen their roots in the limited cities like Delhi, Noida, Pune, Hyderabad, Ghaziabad, Gurgaon, Bengaluru rather than expansion in different geographical locations.

Navneet Singh, CEO of PepperTap stated, “We are pulling plug from B2C grocery business and pivoting to a full stack e-commerce logistics company. Shutting down PepperTap is extremely difficult call for us but it’s the need of hour.”

As per the sources, Peppertap order share per day was about 20,000 in December 2015 which reduced to less than 1000 orders since last month.

Previously, other players joining the list of operational shut down are – Flipkart by shutting down its experimental localized grocery delivery app – Nearby, Zomato and Grofers by shutting down operations in Tier II and III cities, Ola by shutting down Ola Café and Ola Store.

Is it again Tier I, II, III Cities Phenomenon Excuse?

Till date biggies have given excuse of their operational shutdown in terms of limited market acceptance in Tier II, III cities. Zomato and Grofers business model was shut down in small cities because the acceptance was low while e-commerce players like Snapdeal, Flipkart claim that half of their sale is driven by Tier II and III cities.

So, the question from an outsider point of view is that “Is it again a tier I, II, III cities phenomenon that is forcing Indian Startups to shutter their business model?”

In explanation of limiting the presence to cities like Delhi, Noida, Pune, Hyderabad, Ghaziabad, Gurgaon, Bengaluru in early 2016, Navneet stated “The startup has decided to focus on depth rather than breadth, given the short to mid-term investment climate outlook. We are digging our heels in for the long term. We will focus on building a stellar customer experience by providing additional categories and services that differentiate us from our competition in cities where we continue to operate.”

So, why instead of taking better measures like customer service experience, relationship management and enhancing product catalogue, why PepperTap decided to shut down the hyper local grocery delivery operations completely.

Peppertap Shutdown Grocery Delivery Service

CEO Explanation

This time Navneet came up with some realistic problems that they have faced during their journey through Peppertap blog post. Three drivers of Peppertap shutdown are as follow –

[A] Integration of App with Partner Stores – Peppertap was started in November 2014 and since then it was able to serve approximately 20,000 orders per day across 17 cities. With funding of $50 Million in their hand, their trajectory of expansion was exponential. Due to this huge expansion and integration, the problem that consumers faced was the inability to see the entire product catalogue from a store and sometime even the essential items were missing from the catalogue visible to them.

So, they had to integrate the inventory of partnered local offline stores into their App. They have to change the inventory management and billing system of local store to electronic. For bigger chains and hypermarkets, the data generated by their system was being plugged into Peppertap system. To align up to date price and availability of product ie inventory status, the data needed to be updated at the very least, thrice a day.

[B] Excessive Cash Burn – Cash burn was another major contributor. Peppertap was losing cash in two ways –

  1. Cash burnt in terms of the discounts given per order to consumers.
  2. Buffer capacity in logistics and operations team to meet 2 hour delivery time.

Combined cash burn of both the ways was increasing on every single order quickly with no immediate end in sight. So to reduce their cash burn rate, PepperTap decided to shut down operations in cities with small consumer base in early 2016.

With this initiative, they were able to increase the value of their average sale twice and were finally beginning to build value and loyalty – the cornerstones of a sustainable business. They were still financing orders and discounts with capital but now this was a more concentrated burn with a clear goal, timeline and geography in mind, However the timeline and the path to profitability was looking long (very long in fact) and arduous.

[C] Funding Environment – Seeing the global funding scenario, there was no point of losing cash on every single order. Mathematically speaking, this was certain that they would run out of cash by losing money on every order.

Navneet stated, “We couldn’t shake off the feeling that we were walking (not racing like some other companies) towards the edge of a cliff hoping that things will get better before we reach the abyss.”

So they decided to shut down their cash burning grocery delivery business and shift their focus on e-commerce logistics firm.

Naveent further told, “Had we tried everything? Were we convinced that this was not the space for us? Was hyper-local commerce finished as a sector? The answer to all these questions was a resounding “No.”. But let us be clear about one thing, we haven’t taken the task we set out to do in the late summer of 2014 to its rightful culmination in the limited time that we have had. And that’s the simple truth.”

Limitations of Hyper Local Delivery

The value that the core business model of hyper local delivery adds to the consumer is only getting thing at your door step, that too, if consumer is willing to pay additional for that. Here are major limitations associated with hyper local delivery system –

[A] Demand Fluctuations – Following factors contributes to the demand fluctuation of every day –

  • Since the need of grocery is generally at the moment, so people prefer to go for easy option available in the market. Nobody is going to keep waiting for 2-3 hours for a cup of tea, if the milk is running out.
  • People who prefer time to money are the major consumer of hyper local business. So based on the need of consumer, priority and selection of available options changes
  • When so many players are working in same domain, consumers have alternatives to switch to the best fit.

These fluctuations can’t allow the player to optimize the operational team and other resources. You are forced to keep the buffer resources.

[B] Limited Revenue Model – Revenue model of hyper local delivery is limited to commission per sale which if assumed 5% per order, is quite low unless the volume is huge.

The cash outflow includes the manpower cost, assets cost, technology cost, discounts and customer acquisition cost, marketing cost and other inevitable expenditures. So the volume needs to be quite high to meet to balance the cash-in flow generated through limited commission per order.

[C] Operational Optimization Problem – Since the demand is not fixed, the operational optimization can’t take place suddenly. Every single order is different and unique.

Further, 2 hour time bound put a restriction on delivery fleet optimization. Spare capacity needs to be kept to avoid the time bound. Also, the clubbing of delivery is difficult, even though in same areas and particular time span.

[D] Market Competition – Since a lot of other players are also working in same domain, market competition is stiff for long run survival.

Even most of the small shops of nearby areas keep a spare guy for home delivery service for their loyal consumer base, though the process of ordering is not so tech savvy, dependent on phone call, yet it creates tougher market competition as the delivery time is quite less for these smaller shops.

Scope of Improvement is Everywhere

The relevant question here is, “Is there any scope of improvement that can be implements to overcome these limitations for other players?” Here are few thoughts from FS on the same –

[A] Cash Out-flow Optimization and Alternative Source of Making Money –  Since the revenue is limited with existing setup, it’s better to reduce and optimize the cash out-flow and find the other ways of marking money with similar model –

  • Clubbing of delivery orders to reduce per order delivery cost
  • Market dependency for small deliveries in nearby areas ie mixed delivery fleet of own and shops
  • Self-inventory introduction for better profit margins
  • Advertisement on packaging and delivery vehicles
  • Introduction of other product catalogues
  • Last mile delivery of other players ( say e-commerce )

[B] Demand Stabilization Tactics – Since the need of grocery can be easily controlled based on the frequency of consumer usage, it’s good to implement strategies to force consumer to purchase again –

  • Daily, Weekly, Monthly order management system allowing consumers to fix the delivery schedule as per their need
  • Targeted marketing to reach the in-need consumer base. For example targeting office personnel having hectic lifestyle, old age person needing alternative of going to market.
  • Smarter recommendation of next purchase to consumers. For example – Recommendation of organic food in place of normal etc.

The whole concept is to ensure that the demand of old customer shall become known for their every time need and new consumers shall get attracted by the advantages given over other players / alternative.

[C] Smarter Cash Burn – Cash burnt in giving discounts is good enough to ensure the traction but not a sustainable strategy to make loyal consumer base. Cash burnt to give people some reason to return is essential –

  • Loyalty discount for next time use of app. Say 10% discount on next purchase order.
  • Free gifts. Gifts plays a long term impact on consumer mindset rather than 30-40 Rs discount

The point here is to burn the funds not is just giving discounts but in smarter way to win their loyalty.

Logistics – New Hope of PepperTap

The next plan of Peppertap is to become logistics player. As stated by Navneet, “Our foray into full stack logistics space is a well-pondered decision and our experience in consumer as well as business-focused logistics will certainly help us to build next generation e-commerce logistics startup.”

No doubt, with increasing numbers in e-commerce, hyper local delivery, food tech startups and their loyal consumers, logistics is definitely an area in demand. Though the journey is not easy as it seems as other players like LogiNext, Delhivery etc also exist in the market and will definitely create a tough competition for Peppertap. Also, the move of already existing players in the logistics domain will be to reduce the penetration of Peppertap.

What Next in Grocery Delivery Segment?

One of the burning questions here is what next in Grocery Segment. Will other players like Grofers, Big Basket etc face the same fate? Or they will find the way to survive the cash burn, funding toughness and consumer loyalty storm.

The deciding factors will definitely be the operational excellence and optimization, alternative ways of making money and convincing people to remain stick to the same player. Also, the small shops who are losing their business because of these players will definitely come back with better consumer management solution.

Stay tuned with FS for more updates. Till then happy reading.

13 Essential Analyses to Start your own Business

13 Essential Analyses to Start your own Business

The biggest challenge of converting an idea into business model is the right direction of execution to avoid failure in short as well as long run. Though learning through failures is considered as the best source of your development, but in the highly competitive market where same business models are getting enhanced by entrepreneurs, it’s better to minimize the scope of failure at initial stage itself. If you are able to minimize the risk associated with your business, it would not only help you to save the valuable time but also the resources like money, manpower and efforts.

“The strategy is to first know what you don’t know, the tactic is to grind, and the value is to remember: there are plenty of places to innovate.”  –David Friedberg

So here is the small guidebook of 13 essential analyses to start your own business to minimize the probability of future failure –

[1] Problem Analysis – The very first requirement of starting your own business / startup is to analyze the problem that is being controlled by your startup. Problem shall be analyzed in terms of the number of people facing it, their age groups, gender, occupation, affordability limits or any other related parameters that helps in deciding the gravity of problem.

Important part is to understand the difference between problem and convenience. A solution solving the genuine problem of mass gets consumer attention at an exponential rate while a solution providing convenience attracts only limited market volume.

So analyzing the problem from consumer point of view gives the estimate of market potential for your concept. A solution affecting large volume has high chance of success in terms of long term expansion.

13 Essential Analyses to Start your own Business

[2] Solution Analysis – Next step is to analyze the solution that you are providing for the problem. Solution must be analyzed against all the existing solutions on pros and cons of each. Why do people prefer some particular solution? Why would people get shifted to your solution? What are you providing that others are missing? Answers to all such questions give the acceptance limits of your concept.

The positives or features of existing solutions attract the consumers, so the same shall be incorporated in your solution as well along with the unique features.

Analysis of existing and new solutions gives the estimated of necessary features / facilities for your solution. Also, it gives an indication of the market competition that your product / service is going to face during execution.

[3] Market Volume Analysis – Next step is to analyze the market volume for your concept. Combination of people facing the problem, targeted market, penetration rate gives the estimate of market volume for your concept.

Though the estimated market volume for your concept might be huge, but based on the parameters like affordability limits, consumer loyalty etc, the actual volume that you are going to target wil be limited. So, the essential thing while studying the market volume is to know the actual mass who will be interested in your concept.

Based on the above limitations, the further improvements of business model can also be decoded to capture the maximum volume.

[4] Market Competition Analysis – Next step is to analyze the market competition that your product or service is going to face. Direct as well as indirect competition shall be evaluated at initial stage.

Direct competitors are those which share any of the following with your business model – product or service, distribution channel, geographical area, key concept. Indirect competitors are those which are either working in some other geographical area or are having altogether another product to serve the same need (which is being served by your product or service).

Small players of same domain with limited funds can easily be handled by providing better consumer service and expending the business model in related verticals as well. Biggies with huge funds (either working in same domain or getting diverse) can be targeted by developing the business model in the areas out of their reach but of their interest.

[5] Revenue Model Analysis – The ultimate aim of starting any business is to get the more cash inflow than outflow to ensure the profitability. So it’s necessary to analyze all the possible ways of making money through your business model.

Direct as well as indirect ways of earning money shall be analyzed prior to execution. Direct methods are the profit / commission per sale / use of product / service while indirect ways includes the additional services, tools that you can provide to concerned consumers.

Better tactic to list down all the cash out-flow verticals and cash in-flow ways. So, you can easily estimate the minimum sales required to achieve the desired breakeven.

[6] Marketing Strategies – The essential step for success of any business is to reach the potential market volume, convenience them to use your product / service and make them a loyal consumer so that they become brand ambassador of your business model. Marketing plays an important role to achieve this target.

Marketing tactics must be strong enough to convince consumers to get attracted towards new startup concept / product. Most of the people have habit of comparing the available solutions. So the marketing campaigns must include the benefits of new concept/product over the existing ones. Finally the marketing campaign should be strong enough to convert unaware users or users of other players into your consumers.

Press media, social media, television ads, door to door marketing, canopy marketing, cash burn tactics etc are some of the marketing base that can be selected based on the type of your consumers.

[7] Legal Requirements – Legal requirements is again a major area that requires attention of startups. Law changes as per your business model, so it’s good practice to know and define the legal terms and contracts to avoid issues in future.

Founders and stakeholders agreement, payment contracts with vendors, registration process and taxation issues, legal requirements of your business are some of the areas that should be analyzed at initial stage itself.

[8] Scalability Analysis – The business model needs to be expended in future to become one stop solution for consumers, handle the market competition and earn maximum amount.

So the scalability of the concept shall be analyzed in terms of geographical extension, introduction of business verticals and related services, and getting diverse in long run. Though the scalability parameters might get changed during execution based on the market response, but it’s good to have a plan at starting stage itself.

[9] Long Term Target Analysis – Entrepreneurs have two major objectives for their business models, either to become the biggest player of market and acquire the small startups or the expert of some domain and getting acquired by big players. The target should be clear from the very first day, so that all the strategies could be developed and tracked as per the desirable success target and rate.

If you are planning to become the market leader, focus should be on achieving operational excellence, maximum business verticals and profitability. If the target is to get acquired by some biggie, the focus should be on developing business model around the biggie by analyzing the acquisition pattern.

[10] Skillsets Mapping and Team Selection– Next step is to select the team or distribute the work among the available members to execute your business idea.

The best way is to first map the work that needs to be done and the skill set required against each, and then choosing the team as per the desired skillsets or assigning the tasks to members based on their areas of expertise.

Team selection is the most critical factor of startup success. Since at initial stage the only motivation is to achieve your dreams, it’s essential to choose the right people with clear focus and dedication.

[11] Planning on Related Verticals – Planning of what needs to be done is the next step. All the related verticals of your work scope – for example – time frame, budget, communication flow, risks and mitigation plans etc shall be pre-planned to track the achievement and avoid future failure.

[12] Prototype Testing – A prototype is a simple working model of your product that is capable of explaining the concept, potential, functionality and features etc. Though it’s not fully functional, but by creating a rough prototype of your startup vision, you’ll have a much easier time, explaining the concept to potential investors, clients, folks at meet ups and anyone you encounter when evaluating the potential of your startup.

Benefit of testing the concept on prototype is that it gives the feel of real time execution, feasibility limits and challenges in execution, acceptance by mass and the possible modifications required in the planned setup.

[13] Monitoring and Control for Final Product – Once you have done all of the above mentioned steps, it time to execute the final concept. Based on the results of your analysis, you can decide the right and wrong among the available options.

Though no fool-proof system can be developed for startups, above mentioned pre-analyses reduces the possibility of future failures / risks / issues.

Wish you luck for your startup. Stay tuned with FS for more updates.

Startup Ideas for India

Startup Ideas for India

With a boom of startup culture in India, new entrepreneurs with their innovative solutions are coming on horizon day by day. Every problem that you can think of in daily life has been addressed by at least one startup. If your grocery is getting finished, just click on Grofers, PepperTap etc and grocery will be at your doorstep. If you need to visit a doctor, check the nearby doctors on Practo. If you are planning to buy a home, browse Housing, QuikrHomes, Magic Bricks etc. and get the details of all the properties available.

So the biggest question in front of entrepreneurs is which idea should be selected for their ventures. It’s not a good idea to stand against well-funded strong competitor with same concept. It is completely wastage of efforts, if the concept has no demand or market volume.

As explained in our previous analysis “Simplest Guide for Thinking about Startup Ideas”, the concept with wide targeted market can be generated by analyzing the problem faced by mass. Other way of thinking about startup idea is by selecting the sectors that need some improvement. As explained in our analysis “Startup India – Ideas for Entrepreneurs”, Agriculture, Manufacturing and Health care are some of the areas that have huge potential for entrepreneurs. Here are few more specific sectors for Indian startups –

Startup Ideas for India

Waste Management

India’s rapid growth in all the sectors has resulted sudden increase in domestic as well as industrial waste. Rapid Urbanization, industrial growth, deficiency of financial resources, institutional weaknesses, improper choice of technology and public apathy towards waste has made the widespread system of waste management far from satisfactory.

As per estimates, more than 160,000 Metric Tons of municipal solid waste is generated on daily basis in the country. Per capita waste generation varies in cities from 0.2 kg to 0.6 kg with estimated annual increase of 1.33%. Industrial sector is estimated to generate 100 million tons of waste every year.

With such a huge scope of Improvement and Prime Minister Narendra Modi also taking initiatives like Swachh Bharat Abhiyaan, waste management provides large scope to entrepreneurs to develop their business model as well as clean the country. Here are some thoughts from FS Labs for entrepreneurs in waste management domain –

  • House hold Waste Management
  • Industrial Waste Management
  • Agricultural Waste Management
  • Recycling and Reuse of Waste
  • Thermal Power Plant Waste Management
  • Waste Reduction and Efficiency Improvement Techniques

Waste reduction techniques will definitely be supported by mass as well as government and hence has high chances of success.

Power Sector

India’s power sector is quite diversified. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste. Rapid growths of industries, economic upturn, technology advancement etc are the factors contributing in the high requirement of power sector and in expected to increase in upcoming year at high rates.

As per the report of “India Brand Equity Foundation”, Planning Commission’s 12th Five-Year Plan estimates total domestic energy production to reach 669.6 million tonnes of oil equivalent (MTOE) by 2016–17 and 844 MTOE by 2021–22. By 2030–35, energy demand in India is projected to be the highest among all countries.

As of November 2015, total thermal installed capacity stood at 196.2 gigawatt (GW), while hydro and renewable energy installed capacity totaled 42.6 GW and 37.4 GW, respectively. At 5.8 GW, nuclear energy capacity remained broadly constant compared with the previous year. India’s rooftop solar capacity addition grew 66 per cent from last year to reach 525 Mega Watts (MW), and has the potential to grow up to 6.5 giga watts (GW). India’s wind power capacity, installed in FY2016, is estimated to increase 20 per cent over last year to 2,800 Mega Watt (MW), led by favorable policy support that has encouraged both independent power producers (IPP) and non-IPPs.

Here are some of the thoughts from FS Labs to align the power sector in India –

  • Existing Power Plants Effectiveness Enhancement
  • Power Distribution Network and Efficiency Improvement Solutions
  • Coal and Petroleum Products Utilization
  • Energy Saving Solutions
  • Renewable Energy Sources Utilization

Since the demand is high and supply is limited, any solution fulfilling the need will definitely be appreciated by mass.

Human Resource Management

“If China has emerged as the manufacturing capital of the world, India can become the human resources capital of the world. In the coming decades, the world will gain the maximum workforce from India.” -Prime Minister Narendra Modi “Skill India Mission”

Availability of skilled manpower at low/moderate rate has already attracted a lot of overseas players to outsource their manpower and is increasing day by day. A lot of manufactures are getting attracted to make India as their production hub for their global demand. IT firms are offloading their projects work to skilled people in India.

Due to high demand of human resources in domestic as well as global market, Human Resource Management provides a good scope of improvement for entrepreneurs. Here are few thoughts from FS Labs –

  • Affordable Education Resources
  • Manpower Management Solutions
  • Global Sourcing and Optimization
  • Training and Development Solutions

Though selection of idea/ concept plays an important role in predicting the success level of startup, execution plays the most important role. A good concept with bad execution is of no use. So entrepreneurs must analyze all the factors like problem being solved, existing vs new solution, direct and indirect market competition, scalability of concept etc prior to execution.

Wish you luck for your startup. Stay tuned with FS Labs to know more.

Startup India – Ideas for Entrepreneurs

Startup India – Ideas for Entrepreneurs

With increasing support from Indian Government, flow of external funds, flexibility of people to adopt new concept, Startups are getting more and more acceptability day by day. Prime Minister Narendra Modi himself encouraging people through campaigns like “Startup India, Standup India” is encouraging youngsters to develop startup as their career choice. So, the biggest question that haunts every wannabe entrepreneur is the “Selection of Idea / Concept for their Startup” that could easily be converted and scaled into a large business.

As per our previous compilation of “Simplest Guide for thinking about Startup Ideas”, the new concepts could be generated by considering the problems faced by people in their daily life. More common is the targeted problem; more will be the market volume for startup.

In core of its business model, every startup is trying to handle some problem and provide convenience to the concerned mass. E-commerce portals are making the reach of goods to large mass. Aggregator models are helping small players to grow. Directory portals and search platforms are helping people in finding the right option. Hyper local delivery is avoiding the problem of hectic schedules.

Another way of finding the new concepts is by thinking about sectors that are under development and need urgent solutions for their betterment. Based on the sectors with high demand and market share, FS has compiled a list of some startup Ideas so that entrepreneurs could provide some solution to mass for their major pain areas –

Startup India – Ideas for Entrepreneurs


Agriculture along with its associated sectors is definitely the biggest livelihood provider in India and also the biggest contributor in the Gross Domestic Product (GDP). Over 58% of rural population is dependent on agriculture as their principal mean of occupation.

Growth in household income and consumption, expansion of food processing sector and increase in agricultural export are some of the major factors that have worked together to facilitate growth in the sector in India. Escalating private contribution in Indian agriculture, growing organic farming and use of information technology are some of the key developments in the agriculture industry.

As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 15.35 per cent of the Gross Value Added (GVA) during 2015–16 at 2011–12 prices.

Being such a huge market base and a need of time, Agriculture is one of the best sectors for entrepreneurs to focus their venture. Here are few thoughts from FS Labs for agricultural startup business model –

  • Money, Techniques and Knowledge based Solution for Farmers
  • Equipment and Technology in Agriculture
  • Warehouse Infrastructure and Management
  • Logistics Management Solutions
  • Distribution Channel Betterment
  • Yield Improvement Technologies
  • Farming Education Support Network

Since the market volume is huge and the scope of improvement exists on large scale, startups in Agriculture startups will have high probability of success depending on the level of execution. Also, the demand of food is never going to vanish, so the further scope and scalability is huge.


Manufacturing in India is growing after its decline in the late nineties. Introduction of new technologies, increase in import and export business, increased interest of overseas players in Indian market, availability of more skilled manpower are some of the factors to contribute in this growth.

Manufacturing sector currently contributes ~15-16% to GDP (2015) and gives employment to ~12% (2014) of the country’s workforce. Studies have estimated that every job created in manufacturing has a multiplier effect, creating 2–3 jobs in the services sector.

As per the report of “India Brand Equity Foundation”, the Government of India has set an ambitious target of increasing the contribution of manufacturing output to 25 per cent of Gross Domestic Product (GDP) by 2025, from 16 per cent currently. With this target, India’s manufacturing sector could touch US$ 1 trillion by 2025. There is potential for the sector to account for 25-30 per cent of the country’s GDP and create up to 90 million domestic jobs by 2025.

Though the manufacturing sector is witnessing a growth, but it is not in-line with the technologies advancement in global manufacturing scenario. Here are few thoughts from FS Labs for manufacturing based startup business model –

  • Machinery and Technology Improvement
  • Process Automation
  • Waste Minimization and Yield Improvement Solutions
  • Warehouse Management Services
  • Logistics Control and Optimization Strategies
  • Import and Export Domain
  • After Market Solutions – Spare Parts and Services
  • Efficiency and Productivity Enhancement

A lot of OEMs (Original Equipment Manufacturers) and their supporting vendors are burning their funds by relying on old-fashioned techniques. A small concept giving some reduction per unit will generate a huge ­­amount of saving when extrapolated to total annual volume and hence shall be appreciated by all the manufactures of India.

Health Care

Healthcare has become one of India’s largest sectors – both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is rising at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.

As per the report of “India Brand Equity Foundation”, Indian healthcare sector is expected to register a compound annual growth rate (CAGR) of 22.9 per cent during 2015-20 to US$ 280 billion. Rising income level, greater health awareness, increased precedence of lifestyle diseases and improved access to insurance would be the key contributors to growth.

Though a lot of startups are trying to make health care sector better with their business model, but the need of time is making health care services affordable to everyone. A small surgery of heart cost more than 3-4 lakh INR which is not so much affordable for middle and lower class. So, development in this direction is the need of time. Here are few thoughts from FS Labs for health care startup business model –

  • Knowledge based Portals
  • Efficient Tools and Equipment
  • Automation in Medical Industry
  • Machinery and Technological Improvement

If startups are able to reduce the overall cost of medical facilities, it will definitely be appreciated by mass. People who are not able to have access to costlier medical facilities, will become the larger market volume for affordable services.

Wish you luck for your startup. Stay tuned with FS to know more.

Startup Sustainability – How to Survive in Long Run

Startup Sustainability – How to Survive in Long Run

With increasing number of small players in the same domain, market giants getting diverse, customer getting more analytical, the competition to survive in the market is getting increased day by day. New and Young entrepreneurs with limited patience, knowledge base and strategies, struggle for long run survival of their venture. Success probability of startup is 1/10 i.e. 9 out of 10 startups fail. Survey shows that only 1% of startups get funds based on their distinguished business model, potential team and sustainability limits, around 80% of the running startups are self-funded and around 19% of the running startups are dependent of the angel investors, friends and relatives.

“There are no secrets to success. It is the result of preparation, hard work, and learning from failure.”- Colin Powell

So the question is what major areas are on which entrepreneurs should focus to reduce the chances of failure of their startup. FS comprehended a small guide book for startup containing the major parameters to ensure the survival in long run.

Assumption for Case Study

Let’s assume a business model that has already proved its acceptance by mass and has some revenue model. So let’s consider hyper local delivery for our case study of “Startup Sustainability”-

  1. Startup has tied up with nearby local grocery stores to get the good while order being placed
  2. Startup has developed its supply chain ie delivery fleet to manager the show on time (say 2-3 hours per delivery)
  3. Only source of earning is by the commission earned through delivery per order.
  4. Market competition exists ie other players are also working in same domain to capture the same potential market.

Startup Sustainability – How to Survive in Long Run

[A] Startup Business Model Sustainability

Business model is the core of startup success, so here are few tips from FS to make business model sustainable –

Enhance Reach of the Product / Service – First step towards achieving sustainability is by enhancing the depth in the operating location and then the width in other geographical locations.

Since the cost of new customer acquisition is very less in already established location, as the additional cost getting introduced in the picture is only running cost rather than the fixed cost combined with operational cost at a new identified location, startups should focus to capture all the potential market based on market size estimation.

Enhanced reach of startup in consumers helps in building the brand name for consumers. Also, more business at limited expenditure helps in enhancing the cash flow of business model. Recently, Peppertap shut down operations in six cities including Mumbai, Kolkata and Chennai to deepen their roots in the limited cities like Delhi, Noida, Pune, Hyderabad, Ghaziabad, Gurgaon, Bengaluru rather than expansion in different geographical locations.

Introduction of New Business Verticals – Once the brand name start getting recognition with consumers, its better to introduce the related business verticals and services in the existing model to make it a one stop solution.

Since consumers always need the related product or services, grabbing them for the same is good to make a simple business model more diverse and getting more profit. Business model with limited verticals has the probability of shorted life span till bigger players get diverse.

Change Business Model as per Market Competition and Need – Business model needs to be change as per the demand of consumers and market competitors’ strategies.

If switching cost is low, consumers always try to pick the best option available in the market. So it’s not a good idea to lose the loyal market base just because consumer is demanding something additional or competitor is offering something more.

Altering business model as per the need of time helps in building the loyal consumer base along with the survival in competitive and demanding market.

Case Study – For the considered case study of hyper local delivery, following are the few tactics for business model sustainability –

  1. Deepening the roots of startup in existing location by acquiring new consumers and making customers of other players believe to get switched.
  2. Broadening the limited boundaries by operating in other markets as well.
  3. Adding other consumer services like on-demand laundry service, pickup and drop service for goods/courier etc.
  4. Running the surveys to understand the consumer needs and altering the business model as per need.
  5. Adding services as introduced by competitors (say other player is offering monthly order management system, so adding the same in business model.)

[B] Startup Financial Sustainability

Funds are always required to run and manage the business, so here are few tips from FS to achieve long term financial sustainability –

Operational Excellence to Optimize Running Cost – Fixed cost can’t be altered much, so operational or running cost is the area of improvement to optimize the cash out flow.

Since the running cost is the cash loosing slowly but in huge amount, attacking the same would help in achieving financial sustainability. Breaking the operations up to its lowest unit of work, rearranging the work to optimize the process and then assigning the reasonable cost helps in increasing productivity and controlling cash out flow.

Additional Ways to Make Money – Limitation of market size, fluctuations of consumer behavior etc are some of the factors that put uncertainty in any of the business model. So its always a better idea to deploy additional ways of making money with the existing setup itself.

Additional ways of revenue sources not only helps in sustaining the financial condition but also in developing the business model. For eg – Delhi Metro is utilizing the unused space of metro body by making it available for advertisement.

Case Study – For the considered case study of hyper local delivery, following are the few tactics to achieve financial sustainability –

  1. Clubbing the order delivery to reduce running cost per order delivery.
  2. Adding advertisement space on packaging, vehicle etc to generate additional revenue.

[C] Startup Management Sustainability

Entrepreneurs with limited patience, knowledge base and strategies generally face management failure in short run itself. So here are few guidelines to achieve management sustainability –

Plan Before ExecutionPlanning on each vertical before execution is necessary to avoid any sudden failure in future. When things are moved without any plan, probability of failure increases.

What needs to be done? How much cost should be assigned? What should be the timeframe for work? What should be the communication flow? What are the risk associated and its mitigation plan? What are potential opportunities and can be enhanced? What resources need to be purchased or developed in house?

Benefit of pre-planning is that it gives proper indication of success level with progression of execution and suitable majors can be taken if any deviation is observed.

[D] Other Important Factors

Others factors that needs to be taken care for startup sustainability are as follow-

Alter Business Setup to Increase Consumer Frequency – Business setup shall be redesigned to increase the frequency of consumers. Based on the type of product or service, the setup should be designed so that consumers are forced to return.

If the frequency of product consumption is high, consumer should be lured with the use of same player for existing products itself. If the consumption frequency is less, consumer should be lured with the related service, products etc. For eg – Cash-back of Paytm and Freecharge is a good strategy to ensure the consumer will return for next purchase.

Enhanced frequency of consumer helps in gaining financial sustainability as well.

Manage Relationship with Consumers – Consumer is King. So the relationship with existing as well as new customers should be developed and managed in healthy way.

A happy consumer brings more consumers with him while frustrated consumer takes way potential consumers with him. New consumers who are either unaware of the concept or attached with other players shall be convinced to use the product while existing customers shall be convinced not to switch to any other player.

Customer satisfaction level is also a check meter of the operational excellence that startup has achieved till date. A single unhappy complaint is sufficient enough to show the quality of operational excellence of startup. Feedback of consumers is the greatest sources to find the loopholes and areas of improvement in the system.

Avoid Legal Issues – Legal issues not only affect the short term business plan but also affect the long term reputation in the market.

So all the rule and regulations shall be carefully understood and implemented in the setup.

Case Study – For the considered case study of hyper local delivery, following are the few tactics –

  1. Incorporating daily, weekly, monthly order management system, to ensure the frequency of consumers.
  2. Reaching out most of the targeted consumers by targeted marketing.
  3. Including easy return and exchange, refund policies to win consumer trust.
  4. Abiding by all the legal terms related to business model.

FS Outlook – No fool proof plan can be developed to ensure the success. There are thousands of factors that may lead towards startup failure. But it’s always better to move with right plan aligned with clear vision.

Though we see a lot of startup with handsome amount of funds in their account trying to solve some common problem, there is still a huge scope to develop your venture either with the modified same concept or completely new concept. The only thing that matters is how much passionate you are to chase your dreams and what approach you are adopting to achieve the same.

Wish you luck for your startup. Stay tuned with FS to know more.

Ola Cabs – How Ride Time Charges Could Lead You to Pay More

Ola Cabs – How Ride Time Charges Could Lead You to Pay More

As a startup enthusiastic, I always prefer to become user of it to analyze the entire business setup from the targeted market point of view. Since last couple of weeks Cab Aggregators Ola and Uber both are in lime lights for claiming their effective, efficient and affordable cab service as the best, I thought to be a user of it to analyze if there is any loophole in their system that could lead towards inconvenience of consumers.

So, I booked a cab yesterday morning expecting a smooth ride to reach to my destination. But the frustration started since after I received sms stating that ola cab has reached and is waiting for me at my doorstep. I jumped outside to start my ride and reach to the destination on time. But the struggle started since that moment itself. There was no cab and when I called the driver, he was somewhere around half km away from me. After guiding him around 20 mins on phone to reach to the exact location marked while booking, the journey ended up with higher invoice amount than expected.

Below are the details of ride, charge, possible problem and its solution-

Ola Cabs Ride Time Charges

Ola Cab Charges

Booking time of Ola Mini = 9:15 am

Expected time of Arrival of Ola Cab = 9:20 am

Actual arrival time = 9:40 am

I marked the ride late around 9:40 am via Ola App itself hoping it would be automatically incorporated in the invoice.

Drop time = 10:00 am

Total distance traveled = 9 km

Based on Ola’s price details, my rough estimation for the bill was – Base price (40 Rs) + Travel Price (9*6 = 54 Rs) + Ride Time (20 Rs from 9:40 to 10:00 am) = 114 Rs.

But the Actual Amount Charged was 145 Rs.

Ola Invoice Initial

So it forced me to recheck the bill why there was gap of roughly 30 Rs in a single ride.

The ride time charge that was being reflected in the invoice received via email was 40 Rs. So I understood that the ride time was starting from 9:20 am, including the time of 20 min struggle and further 20 mins ride till 10:00 am.

My Reaction and Ola’s Action

I dropped an email to Ola stating the entire incident but received reply “As per our records, the driver has reached your location at 09:20 and you have boarded the cab at 09:38. I am initiating a follow up with the driver partner involved”

Ola Email 1

So I again filed a complaint stating why I would have keep calling driver since 9:20 to 9:40 am if he was already there at my door step and Ola replied “We have forwarded this issue to the relevant team to educate the driver on this, we have taken immense measures to improvise our service and ensure that such experiences will be minimized.”

Ola Email 2

Since my concern was why any user should pay any amount of money for the unproductive time like guiding the simplest route to the driver, I decided to contact Ola again and explain the same issue with more elaboration. So at night I again contacted Ola their facebook page hoping that this time they would be able to under the exact problem and resolve it. This time Ola refunded the additional ride time charge of 24 rupees.

Ola Invoice Revised

Before going to sleep I again gave the entire incident a thought. If Ola is charging 10-20 rupees additional per person on each ride what additional amount they are generating. (If per day booking are assumed as 1 million). And what could be the possible reasons for such incidents and their solutions.

Problem Analysis and Solutions

As per my understanding, there are two possible reasons for the incident –

[1] Ola Unethical Practice – It might be that Ola itself is charging the additional amount by counting the ride time in wrong way. Since Ola refunded the amount, probability of such practices is less. Users, who are able to raise the concern, get their invoices revised.

[2] Driver Fault – Another possible reason is that the driver marked himself as available at 9:20 and kept waiting till 9:40. User can’t mark the driver availability or ride start time in the App. This control is in drivers’ login only.

So the control of start and end of journey shall be given in both hands, driver as well as rider, and based on the unavoidable time differential of both the marked time, invoice shall be generated correctly.

Ola users must check the ride start /boarding time marked by driver before starting the ride to avoid additional charges.

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