StartUp Fraud : Companies suffering with losses still offering huge discounts to attract customers and Surviving upon investment.

Do you want to know about startup fraud?

What is actually happening in our startup ecosystem? 

Startup Companies are running into losses they are not earning even a single-digit profit and they very cleverly hide their losses to escape themselves from the eyes of Investors, their employees and their customers also. All this is happening because most startups are focusing only upon giving discounts, acquiring more customer base, killing their competition and this is one of the most common reasons why startups are not performing well. Most of the newly opened startups they do not have any strong business model what they do is to just copy an idea from any foreign startup or working company whose chances of entering into our country are likely very less, they do create a website a logo and some basic formalities and just start looking for investment. The problem is not only with newly opened startups but also with existing startups too, because their CEOs and Founders are just planning to expand their business but they forgot to look after their customers, they just start compromising with their service qualities, their products, and customer support. And this is the biggest reason why they have to offer these huge discounts to the customers, and it's very obvious if they are providing huge discounts on the products or services then either they are compromising with the Quality of Goods and services or they are getting huge investment. What these startup companies are doing, is this ethically right? Because they are offering huge discounts to attract customers and when they stop doing so these customers switch to other platforms. How long they would survive? By just offering discounts, and for this they have needed a huge amount of investment and this is how this game of investment and discount is running. These companies are actually not concerned about building trust, engaging their customers but to offer discounts. This is ethically incorrect because there are local vendors too who are selling the same product but at the higher cost, they are suffering into losses just because of these startup companies who are just surviving upon investment. I have so many examples and  Shopclues was also one of them, recently Singapur Based Company Qoo10 acquired Shopclues for $70 Million this company shop clues was having the valuation of around $2 Billion in 2015 but when they failed to get investment they fail to sustain in this dynamic E-commerce business environment which is ruled by global E-commerce Giant Amazon. So after discussing this whole scenario, one thing is very clear why do these startups need investments not for expending their business, not to provide good products and quality but to compete with the Competitors and to offer the Huge Discounts to make the customers stay on their platforms.

Here is the example of some of the startups, why do they need investment and how much profit they are earning?

OYO

OYO is the fastest growing Indian hospitality startup valuation of this Company is $10 billion if we visit the website of Oyo it shows Oyo is still in losses and they are hiding it very strategically, overall oyo reported a net loss of around 23.85 billion rupees till march 2019  but the total revenue of this company is increasing, after having the valuation of $10 billion, the company is not earning any profit.

Udaan

Udaan is a business to business trade platform, which is specially designed for a small and medium business in India. This is a newly opened startup and raising funds continuously, total valuation of udaan is around $2.8 Billion, and if we visit the website of this startup company then they are also not earning profits but still trying to expand their startup and to survive in dynamic business environment of India for which they have needed a huge amount of funding.  

Flipkart

Flipkart private limited is an E-commerce company based in Bangalore this company is having a valuation of $20 Billion but still, Flipkart is not earning any profit and are still running into losses.In the financial year, 2016-17 the total loss of Flipkart was around 5223 Crore Rupee and in the Financial year 2017-18, the net loss of Flipkart was approximately 9771 crore rupees total losses of the company increases by 68%. So, to compete with the biggest E-commerce giant Amazon Flipkart needed a huge amount of investment and this is how all these startups are surviving.

Thank you for your valuable time given to my blog I hope you have enjoyed it. 🙏

Regards ~ Aman Shukla