SHOPCLUES: THE UNTOLD STORY

Today we present to you the biggest business failure of 2019, the failure of a company which was giving equal competition to all the giants of its industry in 2015 and it ended its game in 4 years. You will be surprised to know that in 2015 that company got an investment of Rs.8000 crores, but due to continuous mistakes, it was sold at a very low price and even more surprising is that this thing did not even come in the news. Had their Market Value became so low that no media company made this astonishing fact as their news.

Team of Co-founders of Shopclues.com

I am discussing the story of ShopClues. In 2011, Sandeep Aggarwal and Radhika Agarwal, who were spouses, and Sanjay Sethi started ShopClues in California. They believed that a platform or institution could be created that would connect small traders and industries with customers. ShopClues succeeded in becoming that platform. The 3 co-founders with 3 ideas, created a large project for rural and less urban areas of India that immediately got 12 investments within 3 days totaling to 1.8 million dollars. 2011 was the time when the e-commerce industry was in its early stages. ShopClues tried to make changes in its platform over time keeping this fact in mind. They soon launched their mobile application as well. In 2015, Tiger Global invested Rs 8000 crore in ShopClues, which earned them worldwide acclaim as well as competition with giants like Flipkart.


But what mistakes did they make over time, ending their 90% of valuation?


Leadership struggle

Shopclues had 3 co-founders. In 2013 Sandeep Agarwal ji was arrested by FBI for leaking Non- Public Info to a former SAC portfolio manager. The case was of insider trading. Soon after this incident, to protect the image of Shopclues, he resigned from his designation. After some months, he started defaming Radhika and Sanjay, telling others that they have an affair under the profession they follow. The former CEO of ShopClues accused his wife Radhika and her 'boss' of illegally ousting him from the company and changing the voting rights while he was away in the US. In such a circumstance, the customers started to lose the trust on the leadership of Shopclues. Leaders should have the values of Integrity and transparency.

Excessive Product Return

The Unique Selling Point of Shopclues was that it had lakhs of sellers and its main market was the small cities. The platform had unbranded products at cheaper rates. Due to no quality assurance, the platform saw return of 30-40% products booked on a day. The star rating of products became low. Since, the name Shopclues was there on the package box, people blamed Shopclues, and not the seller, for the poor quality product which lead to further defamation.

Innovative Approach missing!

Their pace was good at the time when Amazon was not in the market. But as Amazon entered the market, competition for all the existing E-Commerce companies grew rapidly. Soon, all the existing companies modified the technology involved, delivery systems, quality control measures. But Shopclues did not bring any change to their existing model. With time, the platform became less attractive and eventually, customers flew to other platforms. This started to reduce the market share of Shopclues. If you as an organisation don't show any uniqueness, then such things will happen to you also. You need to think first, fast and be futuristic if you want to remain at the apex. Failures of Ambassador, Nokia, HMT, Blackberry; all are the examples of things that happen when you don't want to have any change in your system with time.

It is as much important to maintain your height, as it is to reach the top.

The higher the building is, the deeper and wider is its foundation.

Lack of capital

E-commerce companies are largely dependent on investment, if they do not reduce the price of the product by themselves, the price may not be affordable. With the help of investment only, e-commerce companies are able to offer discounts to customers. In 2015, Tiger Global invested $ 1.1 billion which eventually brought the name and fame to ShopClues. But since, they were not upgrading over time, other contestants were leaving them behind. In the end, Tiger Global abandoned ShopClues and invested in Flipkart. Hence, Shopclues could not arrange the capital for discounts, logistics and packaging.

Non-possible Merger

Snapdeals was planning to acquire Shopclues. But with time, the website traffic, mobile traffic and customer strength, etc. everything became much lower. And it could have been a tough situation for Snapdeals, if they had actually acquired Shopclues, to re-excite the customer interaction with Shopclues. It could have lead to downfall of even Snapdeals. Hence, the merger failed. Finally, Singapore based E-commerce company QOO10 acquired Shopclues for Rs.500 Crore and no media company gave it coverage.

Demonetization

All the E-commerce companies depend largely on Cash on Delivery. The buyers don't want to pay before purchasing. As the currency was demonetized throughout the nation, all the E-commerce companies instantly launched Card payment, UPI payments and even added subscription option for the customers with extra benefits like Flipkart Plus, Amazon Prime, to remain enriched with capital. But Shopclues did not show immediate change, and was slow to bring the change in payment gateway. This lead to 30% fall in the business. The lost customers were taken by the other companies.

This suggests us-

All the competing companies and government policies like Demonetization, GST can hit hard at your business.

Still, we see people don't obey GST and EWB rules. Government is regulating its strictness every day. Government is observing you and your work and actions. In such a situation, what we can do is finding a way out that obeys the laws, instead of breaking the laws. By doing this, the company may face a temporary loss and a long term profit and our market leadership will be as it is. It should be clear that the taxes being collected from us are utilized in the budget of the country. We provide funds for the bridges, hospitals, IITs, AIIMSs, government colleges, new welfare projects, etc. It is our fundamental duty to pay taxes and work for the welfare of the country. You can save taxes in many ways! You need to find those ways. Otherwise, paying taxes is one of the good jobs that you do as the citizen of a country.

That's all folks, from my side. Leave your impressions and expressions here in the comment box. Also Share it, if it is worthy of it.