The number of startups in India has risen significantly in recent years.
As per the Ministry of Commerce and Industry’s report, the numbers increased from 452 in 2016 to 84,012 in 2022, serving 56 industrial sectors.
India is a lucrative market with a huge potential for growth. It is currently the third largest startup ecosystem worldwide, home to 107 unicorns.
However, not all startups succeed, and often a product or startup completely fails. This blog post will discuss five such products and the reasons for their failures. This will shed some light on the challenges faced by startups in India and how to tackle them.
What Are The Reasons For The Failure of Brands In India?
There is usually more than one reason why a brand or product fails in India. Some of the common reasons can be –
- Keeping up with the Trends – Sometimes, businesses fail to keep up and innovate with new tech and marketing tactics.
- Introduction of New Regulations – It happened a few times when the Indian government introduced a new regulation that restricted the activities of a corporation. This resulted in the loss, and eventually, the brand was shut down.
- Failure to Understand the Market – When a brand cannot understand India’s diverse consumer behaviour and culture, they are less likely to connect with the users.
- Lack of Proper Positioning – Marketing is not a battle of products. It’s a battle of perception (22 Immutable Laws of Marketing). Hence, you cannot sustain for long without proper positioning.
- Poor Branding & marketing – Sometimes, a great product fails because it cannot connect with the audience due to inefficient marketing and branding efforts.
Now, let’s look at the five Indian products that failed and the reasons behind them.
1. Kingfisher Airlines
First on this list is Kingfisher Airlines. Once a common name in almost every Indian household, Kingfisher Airlines was started in 2003.
It was a Bengaluru-based startup with the second-largest domestic market share in air travel. However, the company reported losses and shut down its operations in 2012. Vijay Mallya (the company’s chairman) left India to avoid creditors allegedly.
So, what went wrong with the Kingfisher?
KFA’s downfall started soon after they purchased the Air Deccan (Bengaluru-based low-cost air carrier) that was going through losses in 2008. The company started reporting losses in 2011 and shut its low-cost carrier Kingfisher Red.
In 2012, Kingfisher’s employees went to strike as they did not receive their salaries. The Mumbai IT department had to freeze their accounts, and the company reported losses worth $880 million. The last nail in the coffin was the suspension of their licence by the Directorate General of Civil Aviation.
There were several other reasons as well, like increasing fuel costs and expanding into the international market.
2. Bisleri Pop
Who does not know Bisleri?
The brand name is synonymous with bottled water. Bisleri was set up by Ramesh Chauhan in 1973 and owned by Parle Exports – which introduced Limca, Maaza, and Thumps Up. However, Coca-Cola acquired these products in 1993.
In 2016, Bisleri decided to re-enter the soft drinks market by launching four new fizzy soft drinks under the brand name Bisleri Pop. The four flavours were –
- Pina Colada
By 2018, Bisleri was forced to shut down the manufacturing of Bisleri Pop, and the product never reappeared again.
So, what went wrong with the Bisleri Pop?
The Indian soft drink market is dominated by two international giants, namely – PepsiCo and Coca-Cola. They accounted for about 40% of the total market.
Some international brands also started entering the market, and local competition was also increasing. Bisleri Pop couldn’t capture the soft drink market and suspended its operations eventually.
3. Aditya Birla Payments Bank
When people talk about tycoons in India, almost everyone takes these two names – Birla and Tata. Aditya Birla Group is a Mumbai-based international conglomerate operating in over 100 countries.
In 2018, Grasim Industries Limited and Idea Cellular Limited started a joint venture – Aditya Birla Payments Bank
Both Grasim and Idea are subsidiaries of Aditya Birla Group. They were one of the 11 entities that received a licence from the Reserve Bank of India (RBI). However, in 2019, Aditya Birla Payments Bank shut down its operations.
So, what went wrong with Aditya Birla Payments Bank?
The payment banks have certain restrictions as they cannot offer loans and credit cards. On top of that, there were multiple regulatory consents and approval to continue operations.
The RBI guidelines are not friendly for payments banks, and lack of funds was also one of the reasons that forced Grasim and Idea to discontinue their operations.
Koinex was India’s first cryptocurrency exchange, started by Rakesh Yadav, Rahul Raj, and Aditya Naik in 2017. Koinex offered real-time trading of various cryptocurrencies, such as Bitcoin, Ethereum, and Ripple. However, in 2019, they decided to shut down their operations in India.
So, what went wrong with Koinex?
In 2018, RBI instructed all banks to block crypto transactions and cut ties with individuals and businesses dealing in crypto trading.
Koinex’s day-to-day operations struggled as the Indian government could not finalise the regulatory framework for the trading of cryptocurrencies.
The final straw was a bill to ban all crypto-related transactions introduced by the Government of India in 2019. This resulted in people withdrawing from the crypto landscape, and Koinex had to shut down its platform.
DocTalk was a telehealth care app founded in 2016 by Krishna Aluru, Akshat Goenka, and Vamsee Kamakura. The app allowed patients to interact with doctors directly by paying a subscription fee. In addition, patients could save medical files and prescriptions on the app.
So, what went wrong with DocTalk?
DocTalk was receiving negative reviews from its registered users due to the lack of communication and poor customer care support. Doctors also struggled to maintain records and follow up with patients. As a result, they tried to pivot into an EMR (electronic medical record) solution.
Unfortunately, Akshat Goenka, the CEO, resigns after the pivot without giving a viable reason for his exit. Shortly, their number of users declined, and they couldn’t sustain.
Starting your business seems fascinating in the beginning. However, you need proper strategy and consistent revenue to survive in the market. You can learn from the mistakes of these startups. Some made poor business decisions.
Some had the wrong timing. At the same time, some couldn’t position themselves. Sometimes, the issues aren’t in your control, such as the government introducing laws and regulations that hinder your business operations.
As an entrepreneur, you have to consider all these things before starting a business. You can also read some amazing startup stories from our segment Noise to understand how other startups are working hard to scale and grow.