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Spoils of the Pandemic

Updated: Jul 4, 2022

History is witness that some of the Greatest Organizations were born at the time of the greatest adversities. As we turn the corner on one of such events- the C’19 Pandemic (Fingers Crossed) let’s take a moment to look back at different Startups’ performances in the Financial Year 2020-21- the Pandemic Year. With 40 days of a nation-wide lockdown and intermittent lockdowns all throughout the year, the year witnessed 1.38Bn people coiling up in their homes, sans business, sans job security, sans security of their lives. Consumer behavior changed overnight challenging the very existence of business organizations. No 2 days were consistent or ordinary. Some readjusted courses, some went double down on their existing buz. model while some parked the bus, patiently waiting for the times to be better. Who did it right? Let’s just say, whoever continues to stand today did it right. Who did it best? Let’s pick one industry at a time and find out:

Further Insights:

  • As per a RedSeer Analysis, the global short-stay accommodation market fell by 41% in 2020.

  • Domestic operators performed much worse than their global counterparts owing to strict lockdown norms of the Govt. to prevent the spread of the virus.

  • Interestingly, a close reading of Oyo's segment reporting reveals that close to 60% of Oyo’s business came from outside India pre-pandemic. This has further grown to 67% post-pandemic. Makes us wonder, whether India's strict pandemic response is still a valid excuse for its poor performance.

  • Oyo raised a Debt of $650Mn (INR 4,900 Cr) to weather through the pandemic. More on it here.

  • Despite having a majority focus on the holiday segment (which was most affected within the broader industry), Airbnb was able to keep its de-growth far lower than Indian counterparts and even lower than the global averages.


Further Insights:

  • has emerged as the Dark Horse (even though a smaller player) as in the face of such great adversities, when the whole industry witnessed colossal losses, it still made a healthy profit margin of 57%.

  • on the other hand seems to be the most concerning as its revenue slump is the highest and it also booked a net margin of -116%


Further Insights:

  • Zomato’s net margin of -40% is much better than Swiggy's -63%.

  • Why such huge negative margins? More on it here.

  • Zomato's shares have slumped more than 30% since it got listed in July'21.

  • JustEat, USA, the largest Online Food Delivery portal globally, recorded a growth in all of its geographical segments (North America, Northern Europe, UK & Ireland and Southern Europe). This reiterates that domestic operators performed much worse than their global counterparts owing to the strict lockdown norms of the Govt.


Further Insights:

  • BigBasket fared better in both the topline and the bottomline (-14% as against Blinkit’s -20%) -perks of being managed by TATA.

  • It's interesting to see that Online Grocery Delivery witnessed health growth when Online Food Delivery witnessed a de-growth instead. Speaks volumes about what Indians were doing through the pandemic: Ordering necessities at home and cooking, not ordering-in (mostly).

  • Spencer’s made efforts to make an online presence in the wake of the lockdown but mostly focused on its in-store experience. It’s de-growth further emphasizes the consumer’s preference of staying indoors and ordering at home.

  • The Pandemic Year turned out to be an opportunity in disguise for the online grocers.

  • It's interesting to note that the operating margin of the online grocery delivery segment is much better than the online food delivery segment. Probably explains why there is a recent outburst of quick commerce players. Both Swiggy and Zomato have made inroads in this sector.


Further Insights:

  • Nykaa booked a net margin of 4% as against Flipkart and Amazon India's negative margins. Even though a smaller player, Nykaa has emerged as a dark horse in the e-commerce space as it managed to break-even despite opening shop 5 years after Flipkart. It seems that working in the niche Beauty and Wellness segment has helped the Startup to create a focused brand image among consumers.

  • Or one could make a case that Nykaa reaped the benefits of Flipkart and Amazon’s labor of altering consumer behavior (to shift to purchasing online) for all these years.

  • Even though Flipkart's growth is the modest of all, its net margin came to -5.6% as against Amazon India's -29%. It appears that the Startup, which is now managed by Walmart, has shifted focus to positive unit economics. What's Amazon upto? Read more here.

  • Overall, the pandemic has helped to accelerate the consumer’s shift to e-commerce as research says that the avg. order value and the frequency of orders have shot up.


Further Insights:

  • Nazara booked a net margin of 3% while Dream11 booked a net margin of 13%. The Online Gaming Industry has officially entered the phase of giving surplus returns, as long as it is able to manage Govt. restrictions on real-money online gaming and its various forms.

  • Despite having a year full of sporting events that were either postponed during the surge in cases or were frequently disrupted due to health and safety protocols, Dream11 could turn in a robust growth rate and could also pump up its profit margins.

  • The Growth story of Nazara and Dream11 also tells us about the preferred escape route of people from the mundane lockdown life- Online gaming.

  • Interesting fact: Dream11, which is currently valued at $8Bn and is one of the few Indian Startups to be making a profit, was turned down by 150 investors in its early days. Reminds us of what Mahatma Gandhi once said, “First they ignore you, then they laugh at you, then they fight you, then you win.”

As we turn our backs to the C’19 Pandemic, we see a line of Entrepreneurs and Startups walking along, beaten and patched up, carrying a bag full of take-away notes and a much clearer vision of the future. With this we hail a new phase for our Indian Startups. If the past was about creating consumer-centric innovative solutions, the future will be about developing them into long-lasting sustainable businesses with healthy profit margins. We’ve already identified the leaders of the race. It’s only a matter of time now. Isn’t it?


This article is a part of the March'22 edition of our Startup Newsletter. Here's the complete publication:


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