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  • Terrible business: how Indian start-ups are running behind valuation game but delivering awful customer service?

  • 19/09/2016

  • CRMAA Admin

Terrible business: how Indian start-ups are running behind valuation game but delivering awful customer service?


When Gurgaon resident Aman Grover decided to buy a new mobile through Amazon, he wanted quick service. See what happned with him who narrates all the awful experience he had with amazon.

I want you guys to understand how AMAZON INDIA can humiliate, harass and question your integrity in no time. I just want you to be vigilant while dealing with these guys.(Long but worth going thru)

Following happened with me (and I am sure this will repeat again with some of your friends& family)

1. I ordered for a Nexus 5X thru amazon for INR 33000. After 3 days of ordering I found the phone was selling at 15% lower price. I checked amazon policy of return and decided for a refund of order under policy ‘Better price elsewhere”

2. Requested for a return of phone on 5th Nov 2015 and an Amazon executive came to my place in Gurgaon on 7th Nov 2015(between 8:30 AM to 9:00 AM) told his name as Alock and picked up the phone. He also gave me a receipt of pickup which is signed by him

3. After 3-4 days when I didn’t receive any refund from Amazon I started calling their customer care who continuously gave me assurance that refund is under process and I will receive it in some more days

4. When I didn’t get the refund after 10 days I started tweeting the issue and then came the U-Turn from amazon. They said my phone has never been picked up. I refused the pickup of the phone. I took a pause and asked these guys – Are you kidding me? My phone has been picked by Alock 10 days ago.

And the reply was unbelievable – Sir, We don’t have any Alock at courier station(And its amazon fulfilled order, their own courier). Do you have a video of the guy or handing over the phone? I said – WHAT? Who does that? Who does videography of a courier pickup?

CRM Asia spoke to 50 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.

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.

“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


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.

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.

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 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.

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 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.

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.

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.



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Amit Chakrapani is CEO and Managing Director of CRM ACADEMY OF ASIA. He is responsible for all strategic activities for the company including membership engagement, expansions, strategic business planning, customer acquisition programs.

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