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Dealshare co-founder on shutting down B2B biz, layoffs, and plan ahead, ET Retail

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Dealshare co-founder on shutting down B2B biz, layoffs, and plan ahead, ET Retail

Sourjyendu Medda, Co-CEO and Founder, DealShare

New Delhi: In the past few months, social commerce startup DealShare has been in the news owing to its internal chaos and layoffs. The company which became a unicorn in January 2022, has been undergoing structural changes in its business model as it faced harsh realities.

The Bengaluru-based firm (now Gurugram-headquartered) was last valued at USD 1.7 billion and expanded to about 150 cities. Last year, DealShare said that its customer base touched 20 million and the e-grocer will invest Rs 500 crore in its private label brands.

In January 2023, the company fired 100 employees and paused its operations in about 50 of its operating cities. In July, DealShare co-founder and CEO Vineet Rao was down from his position and the e-commerce startup announced that it is shifting its headquarters from Bengaluru to Gurgaon.

As per the last communication, DealShare laid off 130 more employees and shut down its B2B business, which accounted for 20 – 30 per cent of its total revenue.

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In an exclusive chat with ETRetail, DealShare co-founder Sourjyendu Medda shared that today its cash burn is significantly down to about 15 per cent of the peak. In July, he had told ET that the company’s monthly cash burn was down to USD 2 million from USD 11 million earlier.

Medda talked about the rationale behind shutting down B2B business and the plan of action going forward. Edited excerpts below:

DealShare has shifted its base from Bengaluru to Gurugram. Can you explain the thought process behind this shift?

Our primary business geographies are NCR, Rajasthan, West Bengal, and UP, while our headquarters is in Bangalore. It did not make a lot of sense to operate from Bengaluru when the business is more in the northeastern region. So, we decided a while back to shift our business functions to Gurgaon, while the tech and product functions will continue to be in Bengaluru. So, we’re not disrupting that. We have given a lot of time and support to people to manage the shift. More or less the process is complete.

What is the current employee strength that you function with?

I don’t remember accurately, but it is close to 500.

Can you explain the rationale behind shutting down your B2B business? How did the founders, and the board come to this decision?

If you look at the history of DealShare, we started as a pure-play B2C organization. We were organizing schemes in the grocery essential spaces with lesser-known manufacturers and local brands. We also launched our private labels to bring more benefits to the consumers in terms of savings. During this process, we saw the need for B2B supply aggregation, and that is when we launched our B2B vertical.

However, after running it for a few years, we realized, like many other players in this B2B e-commerce space, that the traditional distribution model is still very strong in India as it is very well entrenched, they have the capital adequacy in their network, very low cost of operations, and they are not bound by a lot of compliances which companies like us are increasing our costs. Now, a combination of all these essentially means that B2B will take more time to become profitable.

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Given that the market is also not very favourable at this point, it doesn’t make sense to put capital into a business where the valuation is a lower multiplier. And in a B2B business, the value depends more on profitability than the scale. You can bring any amount of scale, but you cannot invest money in bringing that scale because it doesn’t create real value for the shareholders. So, that is where we decided to scale down our B2B arm.

B2B contributed to less than half of your revenues. Now, what are your revenue targets and also your monthly capital outflow?

Given that there are a large number of changes, monthly numbers don’t make sense. So, I can give you annualized projections. We will be around half of what we were in the peak.

Also, now that the B2B business is shut down, the burn has significantly come down. It is now anywhere between 10 – 20 per cent of the peak burn.

What is the company’s strategy going forward? What are the core pillars on which you’re building the company now?

We had a lot of high adoption from consumers on the B2C side and also from kiranas on the B2B side, but ultimately, when you are faced with different market conditions, you have to think differently. That is where we took a step back and decided on what we needed to do now.

Now, essentially we identified 3 big issues – One is that B2B would need more investment and not become profitable as fast as we were thinking. So that was one issue we had to tackle.

On the B2C side, we realized that while adoption was very high, we were facing the challenge of retention. Retention was not as high as we would want for our model to become fully sustainable. Also, the margin mix was not coming out properly. So eventually for the company to make sense, you have to have higher retention and a high-margin profile. You can start with a low-margin profile but have to move to a high-margin profile. That path was going up but was not moving in the manner that we wanted.

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It is all about how much you can invest in the business given the market conditions. So as a leadership group along with the board, we decided that it makes more sense to step back and take some hard calls so that we have a better proof of point before again scaling up, and that is what we are building now.

Essentially the changes are that we have shut down the B2B business, and second, we have zeroed down to the core four geographies where customer retention and margins are better. We were operating in eight states, but the other four states were not making that much sense in terms of customer profile, so we are now focused on Delhi NCR, Rajasthan, West Bengal, and UP.

Third, we realized that the Indian grocery business is primarily physical. Dealshare stands for savings and it spans online, offline, and omnichannel.

Can you expand on your offline plans?

Essentially our model is a mass market where we keep only 1500 SKUs, and a lot of them are local brands, small manufacturers, and private labels. We will extend the same model to physical retail. The same amount of savings and the attachment to mass Indian consumers is what we are going ahead with. We are opening neighbourhood stores. Right now, we are piloting the model as neighborhood stores with around 1,500 square feet.

  • Published On Nov 21, 2023 at 02:55 PM IST

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Dealshare co founder on shutting down B2B biz layoffs and plan

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

In a recent announcement, Snapchat revealed a groundbreaking update that challenges its traditional design ethos. The platform is experimenting with an option that allows users to defy the 24-hour auto-delete rule, a feature synonymous with Snapchat’s ephemeral messaging model.

The proposed change aims to introduce a “Never delete” option in messaging retention settings, aligning Snapchat more closely with conventional messaging apps. While this move may blur Snapchat’s distinctive selling point, Snap appears convinced of its necessity.

According to Snap, the decision stems from user feedback and a commitment to innovation based on user needs. The company aims to provide greater flexibility and control over conversations, catering to the preferences of its community.

Currently undergoing trials in select markets, the new feature empowers users to adjust retention settings on a conversation-by-conversation basis. Flexibility remains paramount, with participants able to modify settings within chats and receive in-chat notifications to ensure transparency.

Snapchat underscores that the default auto-delete feature will persist, reinforcing its design philosophy centered on ephemerality. However, with the app gaining traction as a primary messaging platform, the option offers users a means to preserve longer chat histories.

The update marks a pivotal moment for Snapchat, renowned for its disappearing message premise, especially popular among younger demographics. Retaining this focus has been pivotal to Snapchat’s identity, but the shift suggests a broader strategy aimed at diversifying its user base.

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This strategy may appeal particularly to older demographics, potentially extending Snapchat’s relevance as users age. By emulating features of conventional messaging platforms, Snapchat seeks to enhance its appeal and broaden its reach.

Yet, the introduction of message retention poses questions about Snapchat’s uniqueness. While addressing user demands, the risk of diluting Snapchat’s distinctiveness looms large.

As Snapchat ventures into uncharted territory, the outcome of this experiment remains uncertain. Will message retention propel Snapchat to new heights, or will it compromise the platform’s uniqueness?

Only time will tell.

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Catering to specific audience boosts your business, says accountant turned coach

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Catering to specific audience boosts your business, says accountant turned coach

While it is tempting to try to appeal to a broad audience, the founder of alcohol-free coaching service Just the Tonic, Sandra Parker, believes the best thing you can do for your business is focus on your niche. Here’s how she did just that.

When running a business, reaching out to as many clients as possible can be tempting. But it also risks making your marketing “too generic,” warns Sandra Parker, the founder of Just The Tonic Coaching.

“From the very start of my business, I knew exactly who I could help and who I couldn’t,” Parker told My Biggest Lessons.

Parker struggled with alcohol dependence as a young professional. Today, her business targets high-achieving individuals who face challenges similar to those she had early in her career.

“I understand their frustrations, I understand their fears, and I understand their coping mechanisms and the stories they’re telling themselves,” Parker said. “Because of that, I’m able to market very effectively, to speak in a language that they understand, and am able to reach them.” 

“I believe that it’s really important that you know exactly who your customer or your client is, and you target them, and you resist the temptation to make your marketing too generic to try and reach everyone,” she explained.

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“If you speak specifically to your target clients, you will reach them, and I believe that’s the way that you’re going to be more successful.

Watch the video for more of Sandra Parker’s biggest lessons.

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Instagram Tests Live-Stream Games to Enhance Engagement

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Instagram Tests Live-Stream Games to Enhance Engagement

Instagram’s testing out some new options to help spice up your live-streams in the app, with some live broadcasters now able to select a game that they can play with viewers in-stream.

As you can see in these example screens, posted by Ahmed Ghanem, some creators now have the option to play either “This or That”, a question and answer prompt that you can share with your viewers, or “Trivia”, to generate more engagement within your IG live-streams.

That could be a simple way to spark more conversation and interaction, which could then lead into further engagement opportunities from your live audience.

Meta’s been exploring more ways to make live-streaming a bigger consideration for IG creators, with a view to live-streams potentially catching on with more users.

That includes the gradual expansion of its “Stars” live-stream donation program, giving more creators in more regions a means to accept donations from live-stream viewers, while back in December, Instagram also added some new options to make it easier to go live using third-party tools via desktop PCs.

Live streaming has been a major shift in China, where shopping live-streams, in particular, have led to massive opportunities for streaming platforms. They haven’t caught on in the same way in Western regions, but as TikTok and YouTube look to push live-stream adoption, there is still a chance that they will become a much bigger element in future.

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Which is why IG is also trying to stay in touch, and add more ways for its creators to engage via streams. Live-stream games is another element within this, which could make this a better community-building, and potentially sales-driving option.

We’ve asked Instagram for more information on this test, and we’ll update this post if/when we hear back.

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