The darker side of the Indian e-commerce epic: Failed e-commerce ventures

Indian e-commerce space has seen a lot of action in the last decade to become the fastest growing e-commerce market in Asia-Pacific and the 4thfastest growing market in the world. Multi-million dollar fundings and changing fortunes of founders and employees have kept e-commerce companies in the headlines. Amidst the trumpets of ventures that succeeded, the wails of the failures have remained largely unheard.

Here we list some of big ticket failures in the Indian e-commerce space, segregated year-wise.

Failed ventures in 2015

DoneByNone — This Gurgaon based e-commerce venture operated as a women’s only fashion brand. The venture started out as and later changed its name to DoneByNone. It was started by Amarinder Dhaliwal and Vijesh Sharma who were earlier with Bennette, Coleman & Co. Ltd in February 2011. The company managed to raise funds from early stage investor, Seedfund. After customer satisfaction related issues were pointed out in late 2014, the company shut down its operations in early 2015.

Dazo — The food delivery business has had its share of troubles in the past year. Reportedly, India’s first app-based meal delivery service shut down operations in October 2015 after raising seed funds from a flurry of investors ranging from Rajan Anandan (MD, Google India), Amit Agrawal (Country Manager, Amazon India), Sumit Jain (Co-founder, Commonfloor), Aprameya Radhakrishna (co-founder, TaxiForSure) and others.

Valyoo Tech (Bagskart, Jewelskart, Watchkart) — Operating a slew of niche ecommerce websites (including LensKart), Valyoon Tech was unable to secure funding or find buyers for its below par performing websites for bags, jewellery and watches. The company shut down all the three websites in early 2015 after securing funding for LensKart from TPG Growth, TR Capital and IDG Ventures.

SpoonJoy — After raising seed fund from Sachin Bansal and others in December 2014, the Bangalore based startup further raised Series A of Rs. USD 1 million in May 2015 from SAIF Partners. But the success party was shortlived as the company soon ran out of funds and by early-October 2015 it had stopped operations in Bangalore and Delhi. The company was eventually acqui-hired by Gurgaon-based hyper-local delivery startup Grofers in late October 2015. At the time of acquisition, Grofers made it clear that it had no intention of expanding its existing line of business into foodtech and would be absorbing the entire team of Spoonjoy.

TownRush — Started by an ex-Flipkart employees, Saurya Prakash and Ashutosh Banerjee, and ex-Facebook employee Tushar Bisht, Townrush commenced operations in May 2015 after the co-founders saw opportunities in hyperlocal delivery. The started operations in Bangalore by charging merchants to deliver goods within 30-minutes. The company raised an undisclosed seed fund in July 2015 from Lightspeed Venture Partners. It reportedly shut down operations in Oct 2015 due to paucity of funds and was unable to pay salaries to employees. TownRush was another startup which was acquired by Grofers in 2015, following the latter’s USD 45 million funding by Sequoia Capital and Tiger Global Management.

Failed ventures in 2014 — After three rounds of funding where it raised over $30 mn, the Gurgaon based company finally shut shop in September 2014 and changed its business model, after failing to raise additional capital from either the existing investors, Cataraman Fund and Nexus Venture Partners or new investors. had an eventful 2014 with its co-founder Nitin Agarwal and Rahul Jain quitting earlier this year. — This isn’t exactly a shutdown but a massive reshuffle of the product offering. Naspers owned Ibibo launchedTradus, a B2B/C2C e-commerce portal, in 2009. This year in August, the company re-did its business model and launched a location based mobile marketplace to become a grocery only store. Incidentally, Mudit Khosla, who was serving as the CEO of the company and was earlier with SeventyMM, resigned in Sep 2014. — The website for school supplies and educational products shut shop in April 2014 after 3 years of operation and raising over $1 mn funding. Inability to raise the next round of funding was cited as the reason.

Failed ventures pre-2014 — A portfolio company of Kalaari Capital, Hushbabies shut down in Sep 2013 after 4 years of operations and a funding of $5 million. Run by Delhi based Lapis Marketing Pvt. Ltd., the company downed the curtains due to its inability to raise fresh rounds of funding. The founders, Praveena Dhinakar and Vidyasagar Kris, have shifted focus on their other venture

SeventyMM — The Bangalore based online movie rental store shut down in March 2013 after seven years of operations. The start-up launched when Video on Demand was still in its infancy. The company, which diversified into e-commerce in 2010, raised a total of $21.4 million across separate rounds of funding. 4 months prior to its shutdown, the company’s CEO Mudit Khosla resigned from the company. — One of the first e-commerce companies in India, starting out in 1999 as It was renamed and later, after Fabmall acquired US based Indiaplaza in 2007. An investee company of Kalaari Capital and founded by K Vaitheeswaran, Indiaplaza raised $8 mn in funding from 2004 to 2011. The company stopped its operations in mid-2013. — Taggle started out as a group buying site in June 2010, and went on to become an e-commerce venture. After raising $9.5 mn in 2 rounds of funding, it decided to not be a part of the “Last-Man-Standing” game and shut shop in December 2011. — This Rocket Internet online custom jewellery store shut down India operations after operating for 1 year. It still continues to operate in 13 other countries.

Here are a few of the most recurrent reasons for their failure, things that anyone wishing to startup must watch out for:

  • Inability to find investors and raise fresh funds
  • Inadequate funding, waiting too long to raise too little funds, as in the case of Indiaplaza — both probably results of incorrect estimation of funds required to scale.
  • Founders left with too little stake in the company, causing them to lose interest, as in the case of Hushbabies
  • Investor instated professional CEO’s who may not have the same drive and vision as the original founders. Successful e-commerce players like Flipkart and Snapdeal still have their founders at the helm.

For a more detailed analysis of reasons why e-commerce ventures fail/phase out, watch out for our next article.

(Featured image courtesy: Google Images)

Originally published at on January 10, 2016.

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