Start-Up Mortality

Mortality is rampant in the start-up ecosystem as much as investments and unicorns are. Most start-up ideas take off with a bang but fail to work out in the long run. These failed start-up ideas contribute to the mortality rate and ‘infant mortality rate’ of startups. 

Factors that contribute to start-up mortality

• A bad set of investors can easily ruin a start-up’s growth and eventually lead to its closure. 
• The pandemic and subsequent lockdowns are currently the biggest contributing factor for start-up mortality in India. 

Start-Up closure rate in the year of unicorns

The pandemic years of 2020-21 are bad for many businesses but surprisingly proved to be the best years for start-up unicorns. However, the fact remains that many small businesses and SMEs in India have and are continuing to shut shop. 

The closure rate for Indian start-ups, micro, small,\ and medium enterprises is projected at 59% for the year 2021 as they prepare to scale down, get sold or permanently shut shop this year. This forecast is wholly attributed to the lockdown related restrictions due to the second wave outbreak. 

Closures among funded start-ups

The Indian Start-Up Ecosystem has seen close to 3200 start-ups which have received funding. Out of these funded start-ups, about 385 start-ups closed down due to various factors.  

How DDD Framework reduces start-up closure rate

What’s the DDD Framework?

The Discovery-Driven-Disruption (DDD) Framework is a planning technique. It’s a management process best suited for projects with high uncertainty. The DDD framework is useful for start-ups launching new products or venturing into new markets. 

How to adopt the DDD Framework?

Adopt the DDD Framework by breaking your start-up plan into small stages. At every stage, you become aware of and pin-point any assumptions your start-up has which may have proved to be risky. Next, you put these assumptions to the test at the lowest possible cost and timeframe. 

How the DDD Framework reduces Closure Rate

It helps reduce closure rate by de-risking the firm. It also gives start-up founders a way to exit the business at the right time when signs of a possible failure begin to show. 

The e-commerce industry in India has seen new entrants at an accelerated pace. The high demand during lockdowns has made it conducive for many new small players to grab a piece of the meat. However, the big fish are caught in a tussle with the Government regarding allegations of unfair trade practices. 

As a new firm, here are the current rules and regulations governing e-commerce in India and everything you need to know about the increased Government scrutiny.

Draft rules proposed for e-commerce under the Consumer Protection Act. 

FDI Policy prohibits product price tweaks

E-commerce marketplaces providing a platform for international sellers to list their products are not allowed to influence sale prices directly or indirectly as per the current Foreign Direct Investment (FDI) policy. 

Prohibition on ‘Misleading Ads’

The government is tightening scrutiny on firms posting ads on its platform that may be misleading in nature. E-commerce firms are prohibited from displaying or promoting ‘misleading ads’. 

Registration with DPIIT

Online retailers will foremost need to get registered with the Department of Promotion for Industry and Internal Trade (DPIIT).

‘Flash Sales’ are frowned upon

The latest law proposed for the E-commerce industry in India is for a banning on flash sales. The proposal put forward by the Ministry of Consumer Affairs is in favour of physical retailers across India who are listed as ‘sellers’ on popular e-commerce platforms. 

E-commerce firms rely on ‘flash sales’ to obtain an overshoot of orders by targeting customers on special events and holidays. There may be a curb on these heavily discounted sales especially if they negatively impact local sellers. 

Compliance Guidelines

There are also proposals in the pipeline for e-commerce companies to appoint key representatives for the following positions:

• • Chief Compliance Officer
  • Nodal Contact person for 24×7 availability to co-ordinate with law enforcement agencies.
  • Sub compliance officers
  • Resident Grievance Officer

Curbs on selling in-house products

If you are a seller-based e-commerce platform, there may be curbs on launching your in-house/private label. The latest laws governing e-commerce prohibits companies from listing their in-house brands and products. However, popular e-commerce platforms have found ways to bypass or work around these prohibitions. 

Show domestic alternatives to foreign products

Companies may also be urged to be transparent on the home countries of goods listed on the platform and to supplement them with domestic sources. This will give consumers a choice to compare the imported product with its domestic counterpart.

Other compliance guidelines

Other compliance guidelines will be for firms to mandatorily join the ‘National Consumer Helpline’ and to adhere to ‘fallback liability’ (to compensate for negligent sellers). 

Difference between E-Retail and E-Commerce

E-Retail refers to retail carried out on an online marketplace by a retailer who may also have a physical presence at a brick-and-mortar store. On the other hand, e-commerce refers to transactions that occur purely online in exchange of goods and services. They are both similar and often complement each other to facilitate consumer purchases on the internet. 

The economic impact of COVID-19 is extraordinarily troubling on Indian economy. No one has been spared of its unwell effects. Economies regarding a hundred countries are destroyed amongst which few have asked for financial facilitation from the International Monetary Fund. Countries like the USA, Italy and many others are suffering the foremost since their value is extraordinarily high.

Different sports events like IPL and Olympics are delayed. Colleges, universities and schools are closed. The virus has additionally played a role in discontinued functioning of assorted online giants like Amazon. Businesses across the globe particularly amusement, aviation, hospitality, etc. have seen a huge negative impact.

Effects of second wave of Covid-19 on Economic Market

There is an enormous shift within the world economic market and also the share market has witnessed crashes day by day. The outbreak of coronavirus has once again restricted the movement of the people. Citizens weren’t even going outside to purchase the daily necessities and these all were somewhere impacting the economy of the globe as a whole.

Many Factories, Restaurants, Pubs, Markets, Flights, Super Markets, Malls, Universities and offices were cleaned up. Just to give an insight of the disastrous plight, as per reports:

• There has been a down of 30-35% in restaurant business.
• There has been a 20% reduction in domestic travel and about 75% of reduction in international travel bookings.
• Hotel booking rates have also declined from 70% to 20%.

Curfew, Internet Shutdown or 2G Internet Services are not new to Jammu and Kashmir (J&K). Natives in the Union Territory (UT) especially, Kashmir region have lived through this for years. But this time the lockdown imposed in the 11 districts of J&K is to contain the further spread of Covid-19 with an exemption to essential services for 84 hours which is effective from 7:00 pm on April 29, 2021 till 7:00 am on May 3, 2021. The lockdown is to break the chain of transmission and stop the intermingling of people to control the intense impact of the second wave of ‘Corona’ as people in some regions have not been following the norms strictly. Jammu and Srinagar being the Capital cities and among the busiest cities, have a frequent movement from various regions and, Srinagar is currently one of the most affected districts due to Covid.

The Lockdown in 11 districts means chaining the movement in urban cities. However, it will have its own impact on the businesses in the regions.

Let us know what are these districts and the impact in the following section:

Jammu Division – Jammu, Kathua, Reasi and Udhampur

Kashmir Division – Srinagar, Budgam, Anantnag, Baramulla, Ganderbal, Kulgam and Pulwama

Business Impact of lockdown in 11 districts

Some who may succeed in Lockdown

Under the Disaster Management Services, administration in each district issued a notification categorising the essential activities to be carried on as that shall be exempted in the lockdown. This means businesses that deal with the below listed activities shall have ‘business as usual.’

Supply of groceries (wholesalers and retailers) with specific time slot/schedule in some of the districts, fresh fruits and vegetables (mandies and retailers), domestic and commercial LPG and supply of cattle feed and fodder within specific time slots.

Loading and unloading of wheat and rice at FCI and state food depots, milk shops, dairies and related products.

Health services, medicines and other pharmaceuticals (retailers, wholesalers and manufacturing of health and medical equipment).

Telecom operators and their designated agencies, banks and ATMs, newspapers and post offices, dispensing of petrol/diesel at pumps, provision of electricity, water supply, municipal and sanitary services (including the movement of staff thereof).

Transportation of essential commodities through national and state highways (petrol, diesel, kerosene, milk, vegetables, fruits, groceries, FCI supplies etc.) but testing at borders may be required in interstate travels.

Some districts have laid down further detailed notifications including some other services as essential and permissible. For instance, e-commerce and home delivery of essential goods under the essential services shall be available in Jammu district and all industrial and scientific establishments will be permissible in Jammu and Baramulla district. Also, restaurants in hotels shall serve the in-house guests in some districts. To know more, you may go through the Covid-19 guidelines available on each of these district’s websites.