Rise and fall of Indian ecommerce startups: A dive into the future of Indian ecommerce startup story

Abstract

Not so long ago, these were some of the news flashing across different media channels. What started with a devaluation of Flipkart and Housing.com, has now expanded to many sectors of Indian ecommerce and created a cloud of doubts across the whole Indian e-commerce industry. Not long before, the Indian startup giants like Flipkart, Ola, Paytm, CarDekho, Zomato, and many others have become the market unicorn with exponentially increasing billions of dollars of funding signifying the growing investor confidence with every new deals and launched products. The decade long success story reached its peak in the year 2015 and it became the golden year for both the startups and the investors. But this came to an end in 2016 as February 2016 emerged as the worst-hit month, with late-stage deals receiving only 40% of funding and minuscule seed funding. According to the half yearly report1 , H2 2015 saw a record number of deals (500) across sectors being struck between investors and startups in H2. The total value of these deals stands at a whopping $5 Bn. The curious case in point here is that while the same number of deals were struck in H1 2015 (~300) and H1 2016, the deal value immensely differs. The deal value in H1 2015 is $3 Bn, while in the first half of 2016 it has shrunk down to approximately $2 Bn. To understand and analyze the root cause of these stripped-down valuations, we would analyze Indian startup business from bottom to top, understanding each element involved in the value chain and how it impacts the overall profitability of the sector. This analysis would be done for different major Indian startup players and the results of the comparison would be used to design recommendations for the profitable sustainability of the Indian startup industry.