As we had reported some time ago, online price-comparison-engine-social-commerce turned etailer Koolkart has shut down thanks to investors’ frugality. Even though it was a very strong product, running on founders’ savings is not the ideal situation for any startup.

KoolkartHere is a conversation with Anupam Agrawal, cofounder, Koolkart:

You had a very strong product. What went wrong?

There was a failure on our part to build the brand in the way we envisioned. While we were strong at technical execution, marketing turned out to be a weak area for us.

It also became clear over a period of time that running a profitable b2c business in the ecommerce space is incredibly hard. The clearest signal came from the lack of risk appetite from Indian venture capitalists. There were small sums of money available for experimentation, but nothing significant enough to allow planning an operation at some sort of a scale that allows a chance at profitability.

How did you get into a cash crunch? Was there no investor interest?

Ecommerce is a business that is hammered on both sides by front loaded costs and low margins that improve with scale. There is slow ramp up without significant investment. Given we were self-funded for almost 2 years, it became untenable to proceed beyond a point. There was always outside investor interest, people followed us for signs of a breakout that unfortunately never materialized.

What was the traction like?

There was reasonable traction for price comparison – over 200K monthly uniques. The designer marketplace did not scale beyond 50K monthly uniques. Sales stagnated at a certain point which was way below break-even, and scaling up from there looked like a loss-making proposition.

Do we see more casualties in the price comparison space? Seems like its over crowded now?

There is no business model there. Price comparison is a good model to generate traffic. For a small market like India, supporting more than 2 players is not going to be viable. Monetization from the traffic is restricted to ads and commissions through sale on other sites – that are tough to realize from the partners. While it was exciting to start generating traffic quickly on the back of a price comparison service and SEO, it was a mistake to jump in without thinking much about the revenue model.

In hindsight, do you think a stronger brand recall & presence would have helped Koolkart to become the starting point for shoppers since the entry barriers to the business are low?

Stronger brand presence would have helped. Partnering with existing online players was tough due to strong technology teams in-house. One of the directions we explored was a hybrid model of going offline and selling online both. It could be possible to build such a business in strategic partnership with existing offline players.

Marketing turned out to be a blind spot, we thought we had the capability to grow beyond a certain point but it clearly fell short. It was a mistake on my part personally to not build the right team for it.

Anything else you’d like to add.

Indian market is tougher than US markets for tech entrepreneurs, and startups in general. Venture capitalists have low risk appetite and are cautious of making investments at an early stage. Regulatory and infrastructure bottlenecks dont help as well. Basic service providers such as 3G services and broadband are taking forever to scale up. There is a set consumer mindset that borders on mistrust. Very slowly that is changing, but these biases should be kept in mind when planning any business.

It is also important for startups to be clear about what value proposition they bring to the table. There are some inherent strengths in every team, and how it works is a function of how well these abilities are understood and deployed in the achievement of that ONE GOAL. It can get tough for new entrepreneurs to manage expectations of family and build a business at the same time. It is important to be aware of these influences before starting a business. This has been an area of learning for us.

What are the future plans?

I love building businesses and being close to the process of understanding and solving consumer needs. There are big changes happening in established markets. Online businesses are causing disruption at a scale never seen before. Google, facebook and apple are a few examples that have caused us to change our habits completely. Building a business is about taking the time to appreciate these changes. I have a new exciting role at Walmart labs that gives me the opportunity to do just that.

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We have been covering Koolkart right from launch to targeting the long tail of ecommerce. It had that disruptive potential in the space that brings ecommerce and social together. However, it could not garner enough interest from investors, leading to an untimely demise.

What is your opinion? Is this a good sign? Would you term this as a learning-from-your-mistakes failure? Do you think they could’ve done something to prevent the downfall?

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