2020 arguably saw it all – rising fast, falling fast, tweaking or pivoting to survive, rethinking business models, learning fast and acting on it, fixing problems, latching on to one or the other sentiment, and more.
2020 for Indian technology businesses and startups was indeed special. Not because Covid threw a spanner in India’s ongoing quest to successfully replicate the Silicon Valley model or built an even better version of it, if the rise in Ease of Doing Business rankings could be one of its indicators, but because it taught startups how to tackle the unknown. As the pandemic turned businesses on their head, the concomitant threats also posed new opportunities. Nonetheless, it goes without saying that Covid also pulled down businesses in multiple segments particularly hospitality, travel, and transportation from their unbridled growth path. 2020 arguably saw it all – rising fast, falling fast, tweaking or pivoting to survive, rethinking business models, learning fast and acting on it, fixing problems, latching on to one or the other sentiment, and more. Among all that, the following events were perhaps the leading noisemakers grabbing headlines in the outgoing year.
The New Candidate for E-commerce Leadership
Mukesh Ambani’s foray into e-commerce with JioMart could easily be the headline of the decade after venturing into telecom in 2016. The conglomerate’s transition from traditional energy, telecom, and retail giant to a new age technology enterprise has been evident with the massive fundraise it made this year particularly around $6.4 billion raised by Reliance Retail Ventures from Silver Lake, KKR, Mubadala, Abu Dhabi Investment Authority, GIC, TPG, General Atlantic and Saudi Arabia’s Public Investment Fund to double down on JioMart. Importantly, Reliance in its Q1 results had said that JioMart delivers over 4 lakh orders every day “which is significantly higher than any other grocery home delivery company.” What’s certain is that competition for Walmart’s Flipkart and Amazon in India will be turning heads next year in order to maximise and retain their shares in the e-commerce market of among the fastest-growing economies in the world – India, reaching $99 billion in size by 2024, according to Goldman Sachs. The company has already expanded to fashion, electronics and might soon venture into furniture and pharmacy categories as well. Time to sit back and watch the slugfest in 2021 that might see some fireworks.
Deal or No Deal for Jeff Bezos or Kishore Biyani
In 2020, Amazon’s objection to Future Group selling its retail, logistics, and other assets to Reliance quickly snowballed into an epic battle for retail hegemony between Amazon and Reliance in India — probably the last major economy in the world offering massive e-commerce scale. Amazon India already has around $7 billion investment at stake and a chance to retain its dominance here after failing in markets like China. Reliance already has an advantage of traditional retail by its side with 11,931 stores, as of September 30, 2020. Future Group succeeding in closing its deal with Reliance might give a jolt to Amazon as the former may enjoy an unprecedented edge over the latter in terms of access to offline retail, something that Flipkart too has been aggressively looking at. In its latest move, Amazon has asked SEBI to wait for the Singapore arbitrator’s ruling before giving a go-ahead to Future Group’s deal with Reliance. Future Group, on the other hand, has urged SEBI to approve the deal.
Biggest Fear for Paytm, PhonePe, Google Pay, Others
The payment service by the world and India’s largest free messaging platform WhatsApp was touted to be the next big thing in the country’s digital payment landscape back in 2018 when it was launched in beta mode. It continued to excite the ecosystem in 2020 as well and kept competitors like Paytm, PhonePe, Google Pay on their toes. The service got the regulatory nod in November to launch on the unified payment interface (UPI) in a ‘graded manner’ – 20 million user cap as of now — by the NPCI. WhatsApp, which has 400 million monthly active users in the country, is likely to acquire a decent user base in a couple of months ahead. As of November 2020, WhatsApp recorded 0.31 million UPI transactions worth Rs 13.87 crore vis-à-vis 868.40 million UPI transactions done on PhonePe, 960.02 million via Google Pay, and only 260.09 million transactions made through Paytm Payments Bank.
Clawing Back from the Brink of Collapse
Among the tech-enabled sectors, shared mobility, which has companies like Ola, Uber, Shuttl, Rapido, etc., and travel-cum-hospitality counting OYO, MakeMyTrip, Airbnb, and other related businesses, were hands-down hit hardest by the pandemic. However, the app-based cab rides were able to see a gradual recovery to around 30 million in October on platforms such as Ola and Uber after a complete halt during the lockdown, according to the RedSeer data. The ride-sharing including the online booking of cabs, bikes, and autos, stood at 115 million monthly rides as of January 2020. OYO, among the leading hotel chain in the world which had laid off employees this year multiple times including at the beginning of 2020 followed by thousands of furloughed employees due to Covid, and around 300 staff recently fired to check costs, in a statement on Monday claimed occupancy recovery to around 45 per cent of pre-Covid levels with room nights sold increasing over 40 per cent monthly.
The Record Rise of ‘Horned’ Startups
2020 was the best year from a unicorn tally perspective. It churned out record 11 unicorns up from nine in 2019 and eight in 2018. InMobi’s lock screen content startup Glance, local language content app Dailyhunt’s parent VerSe Innovation, fintech company Pine Labs, FirstCry, Nykaa, SaaS startup Postman, Zerodha, Unacademy, Razorpay, Cars24, Zenoti, Nxtra Data were newly minted unicorns taking the total tally to 42 in India, according to Tracxn. The new unicorns are currently scattered across areas including content, payment, e-commerce, stock trading, edtech, auto classified, data centres, software-as-a-service, and more. As of August 2020, the average age of Indian unicorns was seven years with Ola Electric, founded in 2017, being the youngest unicorn followed by B2B marketplace for retailers Udaan that was founded in 2016.
Where’s the Chinese Money?
The impact of investments made by Chinese private equity players and corporates such as Alibaba, Tencent, Shunwei Capital, Hillhouse Capital Group, Fosun, Didi Chuxing, and others has been instrumental in enabling Indian unicorns such as Zomato, Paytm, Swiggy, Ola, BigBasket, Byju’s, OYO and more. However, following China’s central bank – People’s Bank of China raised its equity stake in HDFC above 1 per cent in April, the government had scrambled to tweak FDI policy to curb the opportunistic takeovers and acquisitions of Indian companies as it announced allowing investment from any of India’s neighbouring countries only under the Government route. The stipulation was applied earlier only to Pakistan and Bangladesh. While this certainly raised eyebrows in the Indian startup ecosystem but it perhaps had no visible impact as startup funding in 2020 at $11.4 billion with three investments from Tencent in Flipkart, KhataBook, and Gaana. Hong Kong-based DST Global also made two investments including Byju’s and Cars24 while its partners backed Kunal Shah’s Cred.
TikTok vs TikTok Clones
The banning of multiple Chinese apps was surely a godsend for Indian startups particularly in the short video category in 2020. As soon as the government banned 59 Chinese apps including the then market leader TikTok in June followed by another 118 apps in September and 43 more in November including Snack Video, a plethora of local startups sprung into action and many cropped up almost overnight. The decision to ban Chinese apps followed “the inputs regarding these apps for engaging in activities which are prejudicial to sovereignty and integrity of India, defence of India, security of state and public order,” Ministry of Electronics and IT had said in a statement. TikTok, which had a share of 85-90 per cent of total monthly time spent by Indians on short-form content in June 2020, lost around 40 per cent share to Indian short-form apps in October 2020, according to RedSeer. Indian apps such as Josh by Dailyhunt, MX TakaTak, Roposo, Moj, Trell, Chingari, Mitron, etc., had expanded their share to around 67 per cent. Investors too had lined up to back such startups for the new-found opportunity.
Edtech Finally Had its Moment
Edtech segment, much like short video apps, saw a jumpstart in 2020, thanks to Covid-induced lockdown wherein people refrained from stepping out. Edtech startups, until Covid struck, perhaps never saw the kind of capital infusion that it witnessed this year. Before 2020, it was largely where e-commerce was back in 2014-15. Investments in the edtech market, led by the likes of Byju’s, Unacademy, Toppr, etc., increased 300 per cent in 2020 to $2.22 billion up from $553 million in 2019, according to a market report by IVCA. In fact, over a dozen edtech startups were able to benefit from the Covid tailwinds to grab investor attention. The growth in edtech funding also came amid the government’s attention that saw budgetary allocation increasing from $11.3 billion in 2018-19 to $13.2 billion in 2020-21 and the launch of the National Education Policy this year.
Answer to Eternal Amazon vs Flipkart Question
When it comes to e-commerce, festive season sales in India turn into the biggest battlefront for incumbents such as Flipkart and Amazon. This year, it was Walmart-owned Flipkart Group that managed to secure the top spot during the mid-October to mid-November 2020 sales with around 66 per cent share of the overall gross merchandise value (GMV) worth $8.3 billion, according to RedSeer. On the other hand, Jeff Bezos Amazon’s India business secured only 34 per cent share. The festive month had registered a 65 per cent jump in online sales from the year-ago period worth $5 billion. Amazon and Flipkart had together raked in nearly 90 per cent of the $8.3 billion GMV.