Beware of digital dumping
Small and independent businesses should not fear the technology might of startups, as it is a tool to practice digital dumping. Most Indian startups are harming profitable small businesses, even when they are loss making and unsustainable.
Shahin Khan writes: “Digital dumping is the practice of adding a digital veneer to an existing supply chain, pricing below it, losing money and never having a realistic chance of making money, raising more money, raising valuation, and hurting money-making legacy businesses until one of them buys you for an unrealistic valuation, either to get rid of you or to soon realize that they must because the business will never make money.”
Dollar Shave Club started as the ‘change the world’ brand, which Gillette bought, only to find out that it is not a good business. Most ‘Direct to Consumer’ brands such as Sleepy Owl are aiming to disrupt the market, but they are following the playbook of digital dumping. Myntra is nearly 12 years old, and without profit. Digital giants such as Amazon and Airbnb are building brick and mortar businesses.
Small businesses have a secret weapon against the funded startups. It is building profitable and sustainable businesses. The Big Chill chain of cafes is profitable, without spending money on machine learning and artificial intelligence as Chaayos and Chai Point do.