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For hyperlocal ventures, focus now on sustainable growth

The hyperlocal segment saw a lot of deal activity in 2015, but investors have now turned cautious and laying emphasis on sustainable growth. That was the crux of a panel discussion on hyperlocal business at the Techcircle India Ecommerce Summit 2016, held on February 10-11 in Gurgaon.

Rahul Khanna, managing partner at Trifecta Capital, said that investors are now focusing on how to get their money back while UrbanClap founder Abhiraj Bhal said 2015 was about survival and the journey starts now. “We have to get deeper into the categories and improve the customer experience,” Bhal said.

Industry executives said they had to experiment with a lot of models to find the one that worked. “We started with hyperlocal marketing, but realised it wasn’t working. So we continuously pivoted ourselves,” said Gajinder Singh, CEO, Paymango.

Navneet Singh, co-founder of PepperTap, said that the best way to get customers is through word of mouth. Housejoy CEO Saran Chatterjee agreed that it’s imperative to focus on the customer. Chatterjee also said that while raising funds, startups had to show there is scope to be profitable. “The key part of the diligence while raising money was showing sustainable growth. We had to show that we were not losing money on any order that we fulfilled,” he said.

Chatterjee also said that Housejoy’s acquisition of MyWash was a step toward understanding all the needs of a household.

However, he admitted that unit economics was an issue there and said that he’d be happy if the company broke even in laundry.

UrbanClap’s Bhal was of the view that there are certain categories like plumbing where customers just want to get the job done, irrespective of a supplier. “But for wedding photography or math tutor, the customer does not want you to make a decision. This is where we do curation,” said Bhal. He said that companies need to remove suppliers if they do not measure up to the quality standards and added that UrbanClap had removed a fourth of its suppliers.

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Rohit Shukla March 29, 2016 22:36

Indeed, sustainable growth is the mantra in Hyperlocal or for that matter in any business. Focus on customer, beyond the initial acquisition based on discounted pricing, a definitive loyalty from the supplier retailer end are the key factors.

For well funded startups, the advantage is in terms of runway available to test and find out the winning combination. however the time and number of pivots available for even well funded startups now has a definitive timeline associated.

At UrbanHub, the hyperlocal discovery platform, we had to take a very strong decision to not go the discounting way to acquire customers. But yes, when the most important question asked is the number of downloads, then it’s been a bit tough to not succumb to it and start taking the discounting path.

Interesting times and back to basics for all stakeholders.