Build for Bharat, But Who is Gonna Pay?

A few years ago, the mom-and-pop stores in India couldn’t have imagined opening their own online store to sell their own products. Back then, setting up such a store usually cost around INR 50,000 to INR 1,00,000. Then came Dukaan and Bikayi with the ambition of helping out such Kirana stores; the platform claimed that, with the help of Dukaan, anyone can open their online store within minutes. 

What set Dukaan and Bikayi apart from other competitors like Shopify was the ease of opening an online store. As the target market for Dukaan was the Kirana shop owners in tier-2 or tier-3 cities, the platform focused on a mobile-first strategy. So much so that 98% of the traffic comes from mobile users, which sets it apart from other competitors who are dependent on PCs. 

So, while setting up an online store on Dukaan is possible in under a few minutes, the real question is—do such stores themselves make money? For example, Bikayi, another store providing the ease of taking a store online, saw a steep decline in revenue and laid off around 50% of their employee strength. 

Bikayi: Good product and not-so-good execution

Sonakshi Nathani and Ashutosh Singla founded Bikayi in 2019, it was set up to primarily help small businesses and retailers to launch managed online stores with support for payments, shipping, and digital marketing. At the time, it was essentially a WhatsApp-integrated e-commerce platform that claimed that—from July 2020 to October 2020—53% of its sales originated from tier-2 and tier-3 Indian towns like Kasaragod, Guwahati, Surat, Bahraich, and Dhenkanal.

In January 2021, their annual subscription cost INR 5,000; by mid-2021, it went up to INR 15,000~18000. Till now, their EMI option was available, which as per reports, was used by around 90% of their customers. However, in March 2022, their annual subscription rose to INR 30,000 with no EMI option available. 

To add to the intrigue, Inc42 reported that their revenues dropped to INR 10,00,000 in July 2022 from an astounding INR 1.9 crore in April 2022 at about the same time. According to reports, their employee strength—which was between 500 and 600 in February this year—has been cut in half over the past several months as a result of an allegedly murky internal audit.

Build for Bharat: Not profitable enough?

Bikayi, Dukaan, and Khatabook, among other startups, had initially pledged to Build for Bharat, i.e, tier-2 and tier-3 cities. Khatabook also isn't as profitable as it had hoped to be, much like Bikayi. According to sources, the business sold its holding firm intellectual property valued at INR 57 crore. Additionally, the company only made 19.1 crore in revenues despite having expenses of INR 108 crore.

The community-driven application Kutumb, which was previously advertised as the indigenous version of the Discord platform, is another example of such a platform. Even after receiving almost $30 million in capital from numerous investors, the company lacks a sound business plan. The platform has approximately 10 million downloads on the Google Play store and a subscription-based business model with group memberships priced between INR 100 and 5000.

Although, according to the company, this may have gotten Kutumb close to 6.3 million monthly active users, it still doesn't address the issue of profitability for the business. In fact, it further raises the question whether this route is realistic in the light of the loss of these platforms, which are primarily aimed at smaller city populations.

Sounds good for funding 

Apart from their shaky business models, these companies only have one thing in common: the enormous funding they were able to secure. While Kutumb has a funding of $30 million (a major chunk of which was invested by Tiger Global), Khatabook has raised $186 million to date. Dukaan has raised $17 million by far and Bikayi has received financing of nearly $12.5 million.

Owing to the large and ever-growing number of digital literates in tier-2 and tier-3 cities of the Indian subcontinent, many of these companies tend to find their consumers in these growing markets. However, they also tend to forget that Indian consumers are the hardest ones to cater to. This is the primary reason why after years in the Indian market, payment applications like GPay are not profitable yet. 

Indian consumers have got so much for free already that it becomes hard for a company to launch a product for free at first and then charge later. This was the primary factor that led to Bikayi’s decreasing profits after gradually increasing their product price. At this point, one has to wonder if ‘Build for Bharat’ is feasible at all, or if the companies have to look at another source of revenue. Since, as of now, ‘Build for Bharat’ doesn’t seem to be working all that well.