Land of Unicorns

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Consider this. Amazon and Walmart-owned Flipkart together control 90% of India’s e-commerce market, which is expected to grow to $150 billion by 2022. The US retail giants have their reach across categories like electronics, accessories, fitness, books, fashion, babycare, beauty, home appliances, to name a few. Similarly, ride-hailing Unicorns Ola and Uber control 90% of the $10 billion cab-hailing market in the country.


In the foodtech space as well, firms billion-dollar firms such as Swiggy and Zomato hold sway over a major chunk of the market. As per estimates by RedSeer Consulting, of the daily order volume of over 15 lakh, Swiggy clocks in roughly over six lakh orders, while Zomato manages about 5.2 lakh orders each day.


Experts say the positives of breeding more Unicorns notwithstanding, the start-up ecosystem can get impacted due to the hegemony of a few in the market. Ten start-ups attained the $1 billion in valuation to become Unicorns last year, taking the total tally in India to over 20.


“Unicorns are needed for the ecosystem to thrive and mature. But it is also true that Unicorns can create an imbalance with respect to reducing competition and in due course, leading to smaller start-ups getting wiped off,” says Sanjay Kumar, managing director and co-founder, Gozo Cabs.
According to Harsh Shah, co-founder of fashion e-commerce platform Fynd, which raised funding from Google and others last year, most Unicorns in India have found their growth plateauing.

“This has forced them to expand to other areas which may or may not be allied to their core offering. It is this particular strategy that has led to this uneven market.” Experts feel Unicorns will increasingly gobble up smaller start-ups. “We will see increased consolidation where smaller start-ups with focused offerings will be merged with larger firms which have access to ever-increasing pools of capital,” explains Shah.


Last year, Zomato acquired foodtech start-up TongueStun and drone start-up TechEagle, while Swiggy acquired milk delivery start-up SuprDaily and on-demand delivery firm Scootsy, among others. Prior to that, Ola entered the food delivery space by acquiring Foodpanda, and Foodpanda ended up buying out cloud kitchen venture Holachef last year. These chain of acquisitions by Unicorns naturally reduces market competitiveness.

“Sometimes, the market becomes restricted to a single player or two larger players,” says Kumar.


Moreover, often consumers may not be aware of a merged entity. Jabong, Myntra and Flipkart are all under the same management but appear as separate entities due to the way the individual brands have been retained and consolidated. “To the end-consumer, this creates the false appearance of a market brimming with several distinct players, when in reality the scene is vastly different,” said an expert.


But can emerging start-ups manage to remain afloat as independent entities in the long run? Experts believe innovation is the key and start-ups cannot be copy-cats of Unicorns. “Smaller start-ups must be clear on the problem they are trying to solve. Merely replicating a Unicorn model will not work. Unicorns are focused on solving a larger problem and while doing so, they often miss out on the micro aspects. Smaller start-ups should focus on the underlying issues and create a strong space in that niche,” says Naina Ruhail, co-founder, Vanity Wagon, a natural beauty products marketplace.


According to Rohit Dasgupta, co-founder and CEO, EazyDiner, the objective is to be a significant player in a target addressable market. “We are focused on the eating out segment and not on food delivery. When you are ordering home, you may think of Swiggy. But when you are eating out, you think of EazyDiner. We deliver a friction-free instant table reservation experience at restaurants and have grown 10 times in the last two years.”


Likewise, Gozo Cabs is focused in the niche area of outstation cabs, which still is an unorganised segment, feels Kumar. The venture currently has over 25,000 cabs on its platform and gets over 30% business from repeat customers.


Vanity Wagon, meanwhile, is looking at a current average user growth of 40% month on month, says Ruhail. “We want to be market leaders in the organic-natural personal care products space.”
Over 6 lakh – Of daily 15 lakh orders in a day are managed by Swiggy while Zomato takes about 5.2 lakh orders a day

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