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January 12, 2016

Why don't Indian clones of Amazon care for its DNA?

Haresh Chawla has an biting beginning-of-the-year post for start-ups at Founding Fuel.
There are two Indias: the top 10% that can afford your clone offering, and the remaining 90% that can’t or simply won’t...The Indian consumer is value-driven, not convenience-driven. We have all the time in the world to research and find the best price. Most have time to find a competing offer. We hate paying for service. And loyalty—what is that? Indians will not pay for delivery, service or extra conveniences and will accept deals from your competitors with both hands. Does your clone-model account for this? Servicing the 90% can become a continuous drain on your business. There is no farming with them, only hunting.
What I find utterly baffling is that while our startup entrepreneurs put up Amazon, Uber and Airbnb as their idols, they never focus on how these folks did it. They never tune into the fact that Amazon’s founder Jeff Bezos knows that he is playing a thin-margin game and winning depends on how tightly Amazon is run.
It’s ironic that while Amazon prides itself on frugality, the clones in India are hiring people by the thousands, setting up fancy offices with free lunch for their teams. Their fixed costs, payrolls are nothing short of astronomical. A joke doing the rounds is that there are more top-tier McKinsey and Bain crop of consultants employed in Indian e-commerce companies than in the consulting companies’ Indian operations themselves.
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