e-Commerce industry – lessons to learn better earlier than late

Deepanshu Sharma

Don’t get me wrong, this is not a witch-hunt. Rather, it is an attempt to figure out whether there are sufficient lessons learnt from the most recent experiences in the start-up / e-com world so that future investments are used wisely.

Let’s play a small game… Which of these come to your mind, when you read the 10 quotes or adages? Options –

1. Founders

2. VCs

3. Board Members

4. CEOs

5. “Trophy Hires”, who were often appointed for obnoxiously high salaries

Now for the quotes –

1. Easy come, easy go.

2. If you look after the pennies, the dollars will look after themselves.

3. One man’s loss is another man’s gain.

4. The best things in life are free.

5. “Never spend your money before you have it.” ~Thomas Jefferson

6. “There is a very easy way to return from a casino with a small fortune: go there with a large one.” ~Jack Yelton

7. “Always borrow money from a pessimist, he doesn’t expect to be paid back. ~Author Unknown

8. “If you lend someone $20, and never see that person again, it was probably worth it.” ~Author Unknown

9. “Money that is obtained without effort is spent without conscience.” ~Dr. Idel Dreimer

10. “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” ~Warren Buffett

As you would have guessed, there are no winners in this game, barring perhaps the advertising and logistics industries.

Media and Advertising laughed their way to the bank when these start-ups, armed with obscenely high marketing budgets, went on a frenzy to acquire customers. 

In their defense, media and advertising companies were just doing their job – offering space and eyeballs, in return for a fair sum. They didn’t force the advertisers who went on a relentless pursuit to prove ‘mine is bigger than yours’, but they did play a role. They are the ones who gave the ego boost, by showering praise and awards to the founders, who today send apology letters to their customers and employees. Well at least they had the grace to do that. But I am raising doubts on the calibre of the jury members and the media houses who should’ve scratched the surface and asked the right questions, while there was time.

End game – proposition with ‘no uniqueness’; business with ‘no profits’; customers with ‘no loyalty’; and as you would have guessed, future with ‘no visibility’.The most unfortunate fall-out is job losses and an imminent collapse of a perfectly legitimate and promising start-up phenomenon which leaves behind a trail of ‘could’ve, should’ve, must’ve’. 

I started with a rhetorical and I am closing with another – how many dot-com busts, banking system collapses and e-com flops will it take for ‘logic’, ‘judgment’ and ‘ethics’ to finally find their place in business school curriculum?

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Epilogue - this is an addition to the original article, based on new knowledge gained from of more recent happenings in the e-com world. The flip-flop of a certain e-com apple-kart, with several ups and downs, and then eventually the lucky strike. And there is one more deal which almost snapped, but didn't. And latest news is that the biggest of investors in another unicorn are refusing to pay anymore, but only after sinking in huge cash piles.