Start-ups Failure to Replace Traditional Businesses

12/06/2017

India has food delivery networks that have existed since the 1980s such as Dabbawalas. Emerging start-ups have raised $120 million from both venture capital firms and investors. They have disrupted the existing network by offering free delivery and discounts. Dabbawalas operate on a monthly commitment where customers are fixed into a monthly plan. The new services, however, came up with something different of last minute ordering and allowed them to choose dishes from various restaurants. However, many of these start-ups closed since they offered their services at lower prices and were unable to survive. The Dabbawalas have been in business for long and knew what it takes to survive. They have even managed to retain their market share. Thus, emerging entrepreneurs need to understand the market well to compete with the existing competitors.

The purpose of the author while writing this article is to illustrate the challenges start-ups face in the market. Most start-ups are found to be very optimistic about how easy it will be to get customers of their products. They believe it is easy because they will come up with a nice website to attract customers. This strategy only succeeds with a few customers after which it becomes expensive. As seen in the article, the start-ups had apps, unlike the traditional Dabbawalas. They offered their services at a discount and free delivery. Their strategy later proved expensive and started laying off employees and many closed down.

The article is informative and educates the audience on challenges of starting a business. The author shows that the start-ups failed because of overspending on unnecessary programs and offering high discounts of up to 50%. This is true since the business needs to at least break even to survive. The traditional delivery men knew their business and could not be displaced.