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Walking the Tightrope

Walking the Tightrope

After two years of growing at a scorching pace, led by acquisitions, it seems things are not going well for AskMe. Recently, there were reports that the company has laid off 600 employees, reducing its workforce to 3,500. The company says this was part of its annual workforce rationalisation exercise.

Balancing Act: AskmeBazaar CEO Kiran Murthi (right) and AskMe Group CMO Manav Sethi (Photo: Vivan Mehra) (Photo Illustration: Ajay Thakuri) Balancing Act: AskmeBazaar CEO Kiran Murthi (right) and AskMe Group CMO Manav Sethi (Photo: Vivan Mehra) (Photo Illustration: Ajay Thakuri)

Mumbai-based Jaysukh Jayani, the promoter of Silection Art, sells his products on Amazon, Flipkart and Snapdeal. Last August, he registered his product catalogue on, an e-commerce marketplace. He was given two seller accounts, one for women apparel and one for imitation jewellery. The partnership hit a snag from the word go.

AskmeBazaar did not pay him for the first few apparel orders. Strangely, it paid him for the jewellery orders on time. Even though the accounts for both were the same, it said the details of the apparel account were incorrect. He had to call up AskmeBazaar a number of times and write several emails.

When money was finally paid, the company charged a higher commission (15 per cent) than what was agreed upon (7 per cent). Jayani says he has not faced such issues with other e-tailers and has stopped taking orders from The company says this is a one-off case and not a true reflection of its seller ecosystem.

After two years of growing at a scorching pace, led by acquisitions, it seems things are not going well for AskMe, which, though a late entrant in e-commerce, thought it could make up for the lost time by tapping its massive database of 15 million small and medium enterprises, or SMEs, which is part of its classifieds business. To put this in perspective, India has 38 million SMEs.

Recently, there were reports that the company has laid off 600 employees, reducing its workforce to 3,500. The company says this was part of its annual workforce rationalisation exercise.

At the heart of the problem is lack of focus, weak technology and changes in the overall market scenario - something that's haunting hundreds of start-ups after years of fast growth, funded by investor money. For instance, two investors in Flipkart recently marked down their stake, bringing down the company's valuation to $9-10 billion. The company had earlier said it was valued at $15.2 billion. Also, HSBC's brokerage arm slashed by half the $1-billion valuation of restaurant-discovery platform Zomato. In April, online grocery start-up PepperTap shut shop, while food technology start-up TinyOwl scaled down operations last year.

The Genesis

AskMe was launched by Network 18 in 2011. Its current form (an app) took shape after it was acquired by Getit Infoservices, which also bought Network18's Yellow Pages.

Though the SME database, spread across 50 cities, was a major strength, it had to find a business model that was profitable and could be scaled up. It was a time when consumers as well as merchants were going digital. In response, the company took the digital bet and launched an online marketplace, apart from taking classifieds online. For instance, if a person wanted to buy a sofa set, AskMe would display a catalogue of sofa sets online and also list the outlets from where it could be bought.

The e-commerce platform was named AskmeBazaar, with AskMe handling payments and logistics. Manav Sethi, Group Chief Marketing Officer and Head (Digital Platform), AskMe Group, says the market has either pure classifieds players or pure marketplaces while they have both. "That's why we called it the baap (father) of all apps," he says.

Nayan Bheda, Founder, Indian School of eBusiness

"They could have grabbed the opportunity of becoming a specialist in one category rather than becoming one more 'me-too' generalist"

The launch of AskmeBazaar in 2014 was just a beginning. The owners wanted to scale up, and fast. They went about buying start-ups, minions in their segments, to build a mega start-up. First, they bought BestAtLowest, an online grocery business, and launched AskmeGrocery in May 2015. It was followed by the acquisition of online furniture website MebelKart. The efforts are yet to show results, for several reasons.

Coming Unstuck

Back in 2014, investors were falling over each other to fund e-commerce start-ups, and so acquisitions were easy to fund. Though each new vertical AskMe entered is growing at a fast clip and can become a billion-dollar segment in a couple of years, managing such diverse businesses requires a great deal of management bandwidth and expertise, both in technology and logistics. "Increasing the product portfolio was easy for AskMe due to its database of merchants. Its strength is its wide geographical reach. The model should have worked provided it was built on sound technology, which was not the case," says a former senior leader of marketing at AskMe.

Experts say acquisitions can move companies up the pecking order but can prove to be tricky if not supported by strong processes. AskMe, too, possibly tripped.

Harminder Sahni, Founder, Wazir Advisors, says AskMe was like JustDial, and then it decided to be like Flipkart, and then like BigBasket. "They have lost the plot. Their strategy is changing every three months. In an ideal situation, you change the strategy when you are exhausted. If they are adding new verticals, it shows that the previous strategy has not worked," he says.

A former senior employee says that for the one-and-a-half years he was with AskmeBazaar, the company launched five different products, including a price comparison platform for electronics goods. "These were copycats of other websites. We had to shut them down due to poor response from consumers," he says.

Today, AskMe is trying its hand in almost every online segment - ecommerce, grocery, furniture, classifieds and payments - losing out to the more focused players in these categories. In these segments, it is neither a leader nor a challenger. "Customers need specialists. They could have grabbed the opportunity to become a specialist in one category rather than becoming one more 'me-too' generalist," says Nayan Bheda, Founder of e-commerce education institute Indian School of eBusiness.

Operating several verticals is tough as each requires a different expertise. Otherwise, quality suffers. Furniture, for instance, requires different logistics than grocery. AskMe competes with almost every B2B and B2C player. This is bound to affect its ability to focus and deliver a great customer experience.

AskMe, however, says it has an edge in several areas. In grocery, for instance, it is the other online grocery players that have got their model wrong, says Sethi. AskMe, he adds, has executed a completely hyper-local model. "I cover the entire Delhi-NCR with 23 hubs. Each hub is looked at as a P&L [profit and loss] unit. Each has a relationship with some five kirana stores in its neighbourhood. I cover 5,000 lowest common stock-keeping units or SKUs. It's a completely opex-led and zero capex model," he says. Opex stands for operating expenditure.

AskMe also claims that its network of merchants is unmatchable. "We have about seven million SKUs live on AskmeBazaar. Some 2.5 lakh retailers have opened their [online] stores with us. We are handholding them. This is not what Flipkart, Shopclues or Snapdeal have done," says Sethi. Snapdeal claims its platform has 35 million-plus products and 300,000-plus sellers.

The Weak Spot

Multiple sellers, customers and former employees BT contacted said technology was the weakest link in AskMe's grand plan. "AskMe is essentially a sales and marketing company. Its tech side is weak, which is evident from the poor look-and-feel of the platform," says a former manager in the digital payments vertical. He says the senior management has just sales and marketing people. It's important to have a diverse set of people at the top, not only for operational efficiency but also to attract talent. That's why AskMe hasn't been able to attract good technology talent, he says. "Most of their tech guys have come from the traditional sectors and are probably working with an e-commerce company for the first time," he says. Rivals such as Flipkart and Snapdeal are building strong tech teams.

Sethi does not agree. "We get about 100 million searches a month. I don't think I have a technology issue at a prima facie level. One can argue that our user interface is not as slick as that of Snapdeal, Facebook or Myntra. We have grown so fast in the past two years that we have not been able to focus on building the slickest app," he says.

Kiran Murthi, CEO of AskmeBazaar, says the company didn't have a business model six to eight months ago. "We were scaling up but the business model was not fully there. There were quite a few changes in terms of the overall technology platform because of the underlying model. In the past six months, we have merged all our tech teams (AskmeBazaar, payment, grocery, classifieds and others) and scaled up significantly. We are now fully investing in the tech platform," he says.

Kiran Murthi, CEO, AskmeBazaar

"In the past six months, we have merged all our tech teams and scaled up signifi cantly. We are now fully investing in the tech platform"

"The role of the tech people is to analyse the huge data in the system and keep feeding trends and insights to the leadership. Companies that do not have a tech person in the management are usually deprived of these insights," says Bheda of Indian School of eBusiness.

Another employee says there are no processes for sellers. "Everyone works out of Excel. They cannot even track the movement of products from warehouses to customers," he says. This leads to problems with seller payments and refunds.

"While refunds and payment delays are problems other e-commerce companies also face, the speed at which these are resolved [at AskMe] is like that at a government office. It leads to frustration among sellers, vendors and consumers, which is evident from the number of consumer complaint portals against AskMe," he says.

Hard Times

An e-commerce rival says the market is flooded with resumes of AskMe employees. This is in stark contrast to the past two years when AskMe was hiring at full pace, including from premier institutes such as IITs and IIMs. "Between November 2014, when I was selected for the job, to April 2015, when I joined, it scaled up from 50 to 300 people," says another former employee.

Sethi says people who have been asked to leave are from design and content teams as these functions have been outsourced to partner agencies. A source said around 50 managerial people had been asked to leave, including the fashion category head and the industrial goods cate-gory head. Sales teams for international brands and AskmeBazaar have also been wound up.

Tightrope Walk

While talking to BT, both Sethi and Murthi were gung-ho. Contrary to the pessimism around the company, Sethi said the group was aiming at $1 billion annualised GSV (gross sales value) by the end of 2016. Its present GSV is a little over $700 million.

At present, Getit Infoservices Private Ltd is around 95 per cent owned by Malaysian billionaire T. Ananda Krishnan's Astro Holdings. Helion Venture Partners owns a minuscule stake. The company claims it has raised $200 million so far from Astro. A significant portion of that money has been spent on ad campaigns, hiring, customer acquisition and expanding the seller network.

Getit Infoservices' revenues more than doubled from Rs 23.4 crore in 2011/12 to Rs 51.2 crore in 2014/15, as per the Ministry of Corporate Affairs data. Net losses ballooned from Rs 54.3 crore to Rs 300 crore during the period. With such a high cash burn rate, it will need a fresh round of funding to keep going. "We are on the verge of closing a big round with a new set of investors. The [entire] money will come in the company," says Sethi.

Experts say the overall fund crunch for start-ups and dependence on a single investor may hit the company's ability to raise funds. This is because a big investor keeps tight control over the company and does not give new investors much say in decisions. Sethi agrees that conventional wisdom says that start-ups don't want to bank on one investor and prefer investors who can bring in market access and capabilities that are beyond dumb money.

As far as Astro is concerned, Sethi says, "If you have a single majority investor, sometimes the path you want to take, versus the path that the board wants you to take, may differ. So far, that hasn't happened."

"If Flipkart is facing difficulty in raising money, others cannot be an exception. Nobody can put the foot down and tell investors that I am good at doing something and will do only that. Everybody is under pressure from investors," says Sahni.

For now, it seems AskMe is grappling with more questions than it has answers for.