"Failing to Succeed"- The Story of India's First E-Commerce Company

Posted by Vivek Nama on August 5th 2017

In his book “Failing to Succeed”, India’s first e-commerce entrepreneur K. Vaitheeswaran unravels the challenges facing technology start-ups in India. It is a must-read for aspiring entrepreneurs, investors, industry professionals or business school students and anyone interested in India’s start-up ecosystem. A powerful narration,” Failing to Succeed” is eventually about finding ways to move forward and succeed despite failures.

Snippets from an interview given to The Hindu.
 
“Entrepreneurs are addicted to other people’s money, or OPM,” sounds like a succinct description of the state of the e-commerce industry in India. The pun on ‘opium’ is clearly intended. It comes from K. Vaitheeswaran, the man who pioneered retail e-commerce in India with Fabmart in the late 1990s. Fabmart, later rebranded as Fabmall and then Indiaplaza, folded up in 2013, after a 14-year roller coaster ride. Asked what disappointed him the most, he said, “I don’t have a problem with the business closing down. That’s the nature of the beast. In a start-up, you may not get the financial outcome you want.”
 
But there is bitterness about the way the company failed, he said. “Others, who were also equally accountable, in the company should have owned up to the responsibility. There were a series of incidents that led to this ending. Having to see the collapse of a business I had built for 14 years, customer by customer, in this manner is what leaves me pained and bitter.”
 
So what did happen? “What happened to me is surreal – can’t believe it happened. People who had invested in the company and who were in the board of directors should have shouldered equal responsibility when the company was going down,” he said.He insisted that “we weren’t out-competed, but were undeniably out-funded.”
 
 “The Indian start-up ecosystem is like a caste system — it’s hard to break in.” Mr. Vaitheeswaran is an engineering graduate from the Government College of Engineering in Tirunelveli and did not go to an IIT or an IIM. “Investors indulge in pedigree investing, that’s not a great idea. You can’t assume that all the smartness in India is confined to two or three institutions.”Get out of pedigree investing, he exhorted investors. 
 
What should e-commerce start-ups focus on? Mr. Vaitheeswaran says, that Gross Merchandise Value (GMV) is an overrated metric and that it does not mean anything. In his own business, he had focussed on making each transaction with a buyer profitable. He preferred to focus on metrics such as customer acquisition and customer retention costs. 
 
For someone who pioneered the concept of Cash on Delivery in India, he has had to withdraw the facility both times he tried introducing the concept. “Cash on delivery is a strain on the business. It also shows a lack of trust from the customer.” In the book, he argues that paying online is far more convenient and that CoD looks smart only as long as there is unlimited funding.
 
Does he see warning signals in the ecosystem now? “One thing that all start ups will realise is rarely do things go according to plan. In such a scenario, the investors, entrepreneurs, board of directors, founders, management – they all must read from the same page. Whatever the page says, they must all be fine with that.
 
Is he itching to start-up all over again? “Writing a book is no different from a start up – you need time, discipline and effort. Sure – it does not require a co-founder or the money. Yes, I have done another start up – this book is my biggest start up!”

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