At first Myntra was taken over by Flipkart and then Myntra under Flipkart took Jabong in 2016 which marked the failure of Rocket Internet. This deal has transformed the future of E-commerce in India.
“This deal is a validation of the conviction we had. I remember three to four years ago I had said in an interview when I was asked about Jabong that in 2016 Jabong will not matter,” says Mukesh Bansal, Co-founder and former CEO of Myntra.
Rocket internet is a Germany based company headed by Oliver Samwer with his brothers and founded in 2007. It made its first venture in India in the year 2011 with Asasa.com which got shut even before entering the market due to some legal problems. In 2016 Rocket Internet sold Jabong and FabFurnish, two of its leading businesses in a hurry. It is not wrong to say that Rocket Internet has miserably failed in India.In earlier days Jabong gave tough competition to Myntra, Jabong’s revenue in 2013-14, at Rs.438 crore which was just Rs.3 crore less than Myntra’s. But with 2016 the future of Rocket Internet has changed totally.
- Copy Cat Policy
One of the reasons for its failures could be its Copy cat policy which may have not suited the Indian model. Copying Japans and American business model and executing it in India seemed to have negative impacts. As a result Rocket Internet faced this type of major setback. The hiring policy of Rocket Internet can also be the reason behind its failure.
- Two things at the same Time
Rocket internet tried to be A multinational company and a VC that made the situation more problematic. With copied business model it tried to copy paste it in a country which is too different from the previous one. Instead of adapting to India it tried to change the trends which and pressurized the managing directors in India to their limits certainly backfired.
- Too much Money Investment
Too much money supply on a model based on some other country only led to the self destruction of the company. It gave very less time to figure out things and rushed towards the high end which made things worse.
- Rushed Decisions
With no leadership experience in India, Rocket Internet thought that with good funds from banks and high end consulting firms it would deal with every hindrance but this turned out to be untrue. All the Co-founders were very smart and quick but they worked on an individual basis and suddenly were pushed to work with a group of hundred that with no time given to cope up with the situation. More concentration given to the product market fit would have resulted in a better outcome.
- Entrepreneurship can't be outsourced
The major problem was with the outsourcing element that has led to the failure of the company. Just to give high end results everything was outsourced, be it the manual power or the consultancy. As a result company was far from the reality of the country. Entrepreneurs should never be outsourced because they lack the sensitivity towards the target audience and it will be very difficult to meet the local demands.