#Asia Bad business: How India’s startups are chasing growth but messing up customer service



Photo credit: Wikipedia

When Mumbai resident Anindita Roy decided to try a new grocery delivery app, she wanted quick service. But when her order – promised within 90 minutes – never showed, she balked.

“It was a prepaid order. I’d waited for long and there was no intimation from the company till I called up. They then said they could not deliver that day,” she said.

Anindita is not an outlier. Across cities in India, customers are reporting growing exasperation due to the blow-hot-blow-cold customer service Indian startups are dishing out.

Tech in Asia spoke to 25 online shoppers in Mumbai, Delhi, Hyderabad, and Bangalore who had complaints about patchy service from a host of companies across the board, including Grofers, Pepperfry, Housejoy, UrbanClap, PepperTap, and others.

Shoppers in Bangalore complained about massive delays in furniture shipments from Pepperfry, made worse by a tough time scheduling handymen to put the furniture together after delivery.

The Pepperfry media team did not respond to emails seeking comment.

Between January and September, investors put in US$7.3 billion across Indian startups. A bunch of these startups are in the customer services sector, meaning that they run businesses that promise people respite from their daily chores.

The trouble is, not only do they compete with other startups, but also with the local unorganized sector, where homekeepers have asked their local grocers to deliver stuff at no extra charge, local beauticians have taken care of patrons’ needs, and the neighborhood laundry guy has picked up customers’ dirty clothes for years.

grocery store india

Photo credit: Wikipedia

“This is a Catch-22 for everyone. Out of ten companies that do the same thing, only two to three will survive. So they are under intense pressure to grow,” said a leading investor, who did not wish to be named because his company funds some of the companies mentioned, or their rivals.

“They are running at a 100 miles an hour and at a 100 miles an hour you can only do so much… any value proposition that says faster, cheaper, better would be under stress. At best you can focus on only two.”


Sure enough, customers complained about unpredictability, saying experiences on apps that started off promising hassle-free services could turn utterly sour over lost orders, refunds, or untraceability of shipments. Leading app-based companies in India cater to thousands of people in many cities. Grofers, for example, said it takes in over 50,000 orders a day.

While customers acknowledged no company had messed up orders or services for them at all times, most claimed to be facing a rise in such incidents.

For Anindita, Grofers rescheduled the delivery for another day after some irate phone calls from her, but others have experiences on a variety of apps that range from complete no-shows to never-refunded money.

“[Being] late is, to be honest, many a times a function of things totally out of our control,” Dhruv Arora, head of Grofers’ customer experience, told Tech in Asia in an email.

Dhruv said the team is investing in technology to map better routes and minimize delays, as well as hiring more people to cover more customers.

Unlike in developed economies, cheap labor in India has made many startups lean heavily on manpower, where companies maintain squads of delivery boys, drivers, and errand runners to serve customers.

And that’s with good reason. India’s peculiar problems, ranging from ever-present traffic snarls in metro cities, to patchy network connection, to a broken last-mile delivery structure, means technology cannot solve all ecommerce issues.

traffic India

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But training hundreds or thousands of employees to ensure a consistent level of service is a tough ask. And yet, since that’s what the companies promise, that’s what customers expect.

When companies own their fleet of delivery personnel and workers, they have more control over quality. But that’s a pricey proposition, and startups often mix it up with third party workers.

Glitches come from a variety of reasons, from untrained delivery boys to unstocked merchants to part-timers simply not showing up.

Saran Chatterjee, CEO of Housejoy, said:

The [services] market is highly unorganized. Their training is not standardized. While we have an onboarding process, we do see some problems,

Housejoy lets users book everything from plumbing services to beauticians on its app. Housejoy competes with UrbanClap.

Dude, where’s my cab?

In the taxi segment, one of the most booming app-based industries in the country, Ola has taken on drivers who are not conversant with city routes, or get lost on the way to pick-ups, many customers said.

Breakneck growth has taken a toll on its employee satisfaction as well, according to some drivers. In Bangalore, for example, three drivers Tech in Asia interviewed refused to ply on Ola Money, accepting only cash. They blamed a delay in processing by the company. The drivers did not want to be named because they are currently enrolled on Ola.

Ola did not respond to questions about this, but sent a statement saying it hires verified professional drivers, trains them, and has a “constant feedback mechanism.”

Ola hires more than 7,000 people in the country to serve 102 cities. Its Silicon Valley-based rival Uber employs about 200 people to serve around 22 Indian cities, and isn’t glitch free either.

“A lot of our driver-partners may not be from the city they work in; they come to the city from different parts of the country to look for jobs,” an Uber India spokeswoman said.

Both Ola and Uber said they have trained drivers, many of whom are first time smartphone users, to use GPS for easy navigation. But India’s congested telecom lines often mean phones lose connectivity, and both driver and customer are stuck.

Patience pays

“The only way to build an execution business is to be patient,” said Sharad Sharma, co-founder of iSPIRT, a think tank and policy advocacy group for startups. “Hedge fund money is not patient money.”

Three investors in the sector Tech in Asia spoke with agreed that aggressive investors looking for exits could push fledgling startups to a stretch, but said eventually, it was up to founders to take a call on how much they wanted to chase growth, and at what expense. The investors did not want to be named because they have backed some of the companies named in the article, or their rivals.


Photo credit:Flickr

Founders at various companies too said that the rush to grow did mean customer satisfaction would take some hit, but added that the age of chasing mindless growth over returns was slowly shifting in India.

“We are not expanding in the short term; and are focusing on getting the customer experience right before we start expanding again,” said Navneet Singh, co-founder and CEO of grocery delivery app PepperTap.

“Actually, our investors are are quite supportive of our measures of consolidation rather than mindless expansion.”

The price of not doing that, of course, is that in the mad chase for growth, companies lose their core customer base. In the app-sea of sameness, user stickiness is hard to come by, even for established players.

“I don’t care if my groceries are done by Grofers or PepperTap or someone else,” Mumbai’s Anindita said. “I care that it is delivered on time.”

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