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3,00,00,00,000 Startup Failure 馃敟| Business Case Study In Hindi | Startup Case Study in Hindi 馃敟| - YouTube
Channel: Aditya Saini
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Friends the start up case study that I have brought
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today, you may find its name very funny but there
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is lot to learn from it, its name is Doodhwala.
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Jack Ma who is the chairman and founder of Alibaba
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and the richest man of China as well, he says
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Learn from other people's mistake.
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Means you should always learn from others mistake.
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This will always help you in life.
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Our lives are not long enough that we can
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commit all the mistake & learn from them on our own.
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Friends I have talked about loss because
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the Doodhwala is actually a failed start up.
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Yes this start up has been shut down.
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This start up was established by Akash Agrawal
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and Ibrahim Akbari in 2015.
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And this start up shut down in 2019,
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means after four years.
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Now what are the reasons behind this?
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Was this start up actually a down falling?
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Was business not growing? No, it is not like this.
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But this start up was growing at a 250% annual
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growth rate.
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They used to deliver more than 70 types of milk
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and groceries.
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Moreover they used to deliver before 7 am
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to their customers and price was below MRP as well.
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And they provided free home delivery.
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They had received the funding of Rs. 210 Crore.
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But then why did they fail?
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I will discuss 5 major points behind their failure.
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First reason is Negative cash flow.
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Let us understand the meaning of this.
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See, a business has various types of expenses.
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Management has its own expense.
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apart from that logistic expenses are there,
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operations expenses, web development expenses,
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web hosting, app management all these expenses,
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marketing expenses which are 80% for start up.
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Now in grocery business you need high working
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capital, very high working capital is required,
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you should have the cash.
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Secondly, High Customer Acquisition Cost,
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the cost of acquiring one customer is very high.
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The ideal profit margin is also very small
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it varies between 5 to 15% & zero customer loyalty
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nowadays customer are quite price sensitive.
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Expenses were more than the revenue,
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always remember one thing 'Revenue is not equal
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to profit', your revenue is never your profit.
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See, let us understand this point.
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When you sell a product, that is actually
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the revenue of the company.
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When you subtract all the expenses from it,
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the cost of everything, means cost of land, building,
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electricity all types of costs, when they are
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subtracted, then the remainder is called as profit.
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So revenue is never equal to profit.
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Now understand one point properly,
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in grocery and hyper local market,
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you can earn by two ways only,
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first is by Purchase in economies of scale
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means purchase the products in bulk quantity
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so that it is at low cost or the second is
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Sell in Economies of scale, sell in the huge
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quantity that your profit increases because of
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volume; or you can do both.
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Next point is no competitive advantage.
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Doodhwala didn't have any competitve advantage.
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The work Doodhwala was doing, that is of grocery
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selling and milk selling, this is done by other
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businesses as well; Grofers, Big Basket,
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Fresh to home are also doing it.
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Now see Doodhwala had comparatively less funding.
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when their funding was less then their customer
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retention was comparatively lowered.
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Because they were not able to offer enough
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discounts to customers, on the other hand
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Grofers, Big Basket had lot of funds.
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So they were offering discounts to customer
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again and again, and were able to retain the
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customers; now that was the difference.
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There is high competition in grocery business.
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If you have to succeed in any business then
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either you should become the first mover
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or you should become fast mover.
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Third point is Lack of planning.
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Now see, proper planning is definitely required.
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In businesses, businessmen should keep in mind
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from first day that where his profit will come from.
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You have to consider the profit from day one.
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Make this sentence very clear in your mind.
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Expansion without gross margin is committing
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suicide.
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Now see Big Bazaar, D mart, Reliance fresh,
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and easy day, all of them are in the grocery business
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in the retail business; but they are profitable
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from day one, now there are two types of expansions
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one is steady expansion & other is over expansion.
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I will explain the difference between these two.
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The steady expansion means you are expanding
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within the capacities of your business and not
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expanding uselessly.
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Over expansion means you are expanding more than
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the capacities & resources of your business,
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and when you do this then you are preparing for
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suicide on your own.
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Next point is Wrong hiring.
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They had done lot of wrong hiring, see the manpower
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is a the gold maker of a business.
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They bring lot of money in the business.
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If you hire the right person for the wrong job then
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one day you will lose your job.
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First mistake they committed was wrong hiring.
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They hired wrongly, they brought wrong persons in
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organization, that was their first mistake.
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Then their next mistake was Over hiring.
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They hired those who were not required in the
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organization; they did useless hiring with which
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their expenses increased so much.
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Now firstly there was inefficient HR management.
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They did not do proper human resource management.
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Then their was Lean forward kick backward.
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Run ahead and leave those who are behind.
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They didn't care about their old employees.
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Then they had wrong salary structure;
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expenses increased because of wrong salary
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structure.
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Their last mistake was Over dependency.
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They were very much dependent on investor money.
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See the investor works as only a pinch of a salt
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to your dish.
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Means your food is business and they are serving as
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salt only.
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When you depend so much on investor then
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your situation is like a toy which needs constant
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input.
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Then you keep on crying we need funds;
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and now investors don't give the funds.
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Your business is expense centric
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moreover you are burning the cash from investor
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funds; then you have zero sustainability
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in business model.
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So what is the result of all this at the end?
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The result is shut down written in bold letters.
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Which happened with Doodhwala in four years.
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They survived for four years only because
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they were able to sell and had funding as well.
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If you are watching this video till this point then
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do let me know in the comments about the video.
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Press the Like button if you really like the video.
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