“EDITION 15”

Published: 6/5/2020

“EDITION 15”

Damn looks like we some news from pretty a huge Indian startup (and their operations in the US) and one of the biggest American company of all time (and their operations in India). I swear I didn’t plan this people, but lots & lots to unpack here:

  • http://bit.ly/2Pyjso2 (The Information): OYO’s US expansion goes awry
  • 2019 was the year OYO decided to launch their US expansion but it hasn’t been going very well so far. With an initial goal set of 100k rooms, they have only managed to end the year on 20k.
  • US was the second large expansion after China for OYO and it sounds like they don’t really understand the market very well.
  • The US they compete with motels & budget hotels along highways & in smaller towns but the US isn’t like India in the fact that they already have established brands in place which have a decent user reputation.
  • Moreover, their initial plan for the US was to guarantee a certain revenue metric their partners would get (& pay out of their own pocket if the partner doesn’t hit it).
  • This along with the fact that they controlled hotel rates have led to huge losses for the company (some $74/night hotels are on the platform for <$30/night), and has worried hotel owners about the reputation this gives their establishment.
  • And seeing how things are playing out globally for them, I think they’re going to really cut down on growth & focus more on trying to make some model work in the US.
  • I am very skeptical they can crack the US market, but always love to be proved wrong
  • https://tcrn.ch/3afAu2r (TechCrunch): Amazon gearing up to enter the food delivery market
  • Amazon, the global eCommerce & Cloud Services behemoth, is all set to start delivering food in India.
  • On the tails of UberEats exiting the Indian food delivery space, the hopes of the market being a duopoly (Zomato & Swiggy) has been cut short.
  • Amazon is currently testing their food delivery service in BLR but will probably roll it nation-wide along as a part of it’s Prime or Fresh service.
  • Indian food delivery services (like their American counterparts) haven’t figured out how to be profitable yet, with low product prices, so it seems like Zomato & Swiggy will have to subsidize their prices for a while.
  • But Amazon & its appetite for large losses in India, it might be able to stick around longer and dominate the Indian market, and wait until Zomato & Swiggy pivot/get acquired/figure out profitability.
  • Feedback & ❤️ always appreciated

    More tomorrow :) BONUS (Rumor of the day): Apparently after the news of BharatPe raising money, Khatabook is in talks of raising an additional $70M at a valuation of $300M. 🤯🤯🤯