VC are leaving for holidays and it marks the end of this phenomenal year of ecommerce funding. Everybody but the investors made money in the blood bath lead by marketing spends. People did warn about a bubble in the making but they were not talking about the real bad cases.
Taggle.com, the much talked about daily deal site that raised $8.75Mn has shut shop. The homepage reads:
We have decided to cease our ecommerce operations effective immediately. We will not be taking any more orders from our users.
We started Taggle in June 2010 with US$1M in funding to build a sustainable and profitable business by getting the best service and product deals for our users. We have always believed in providing superior experience and value to our users. When we realized that service deals were not giving the best value to users, we quickly shifted focus to only products. Our users responded very positively to the shift and it reflected in our revenue numbers too, we grew our revenues 10 times within 3 months of the shift.
However, the current market conditions have many ecommerce players selling products at below cost price to lure users. The only way to sustain the business at this time is to get into a price war and burn a lot of investor money and try to outdo competition in a Last Man Standing game. This practice goes against our philosophy of building a sustainable and profitable company. Hence, weve decided to go back to the drawing board to figure out the best way forward.
The site earlier shut down the local deals business and converted into a product ecommerce company. This happened along with the CEO’s exit.
Anyways, good that the team attempted something and realised the real deal early. Hope they come back with a bigger bang [in terms of product and not marketing/funding ]. Don’t worry about the investors, it’s business as usual for them.
The last line from Taggle about ‘last man standing’ reminds me of leading eCommerce venture’s founder I overheard saying at a conference, “Our strategy is to wait for every one else’s money to dry down.” I know they themselves are having a hard time now.
Meanwhile, from pure hearsay, the situation at Myntra and SnapDeal do not look good. Someone well connected with Myntra suggests that their burn rate is Rs.5Cr per month (a tad difficult to digest) with most of it going to advertising. SnapDeal is also running cash dry. I repeat, this is from here pure hearsay.
Guys at Taggle, please take down rest of the pages as well. Having a “buy” button that does not work will lead people to believe that eCommerce in India is broken.
[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]