This is probably another #startup idea whose time hasn’t yet arrived. Today, Yappily – India’s first online flea market – announced that it was shutting down operations. “At this moment, we have dissolved our team, shut down our office, the application is running on an auto-pilot mode, and will continue to run so,” co-founder and CEO Rashmi Ranjan Padhy told Tech in Asia.
The startup had raised around US$1 million in a seed round of funding from Orios Venture Partners and a few angel investors last year. This round was not disclosed until now.
Rashmi took us through what led to the decision to shut shop when the startup still had “capital in the bank.”
Given the funding scenario and the mindset in India, we do not have the luxury of time anymore.
Yappily had started as Koove, a peer-to-peer used goods marketplace, in January 2015. It was modeled on Singapore’s Carousell, which is backed by top investors like Rakuten Ventures, Sequoia Capital, Golden Gate Ventures, and 500 Startups. At last count in the end of 2016, Carousell claimed to have over 57 million listings and over 23 million items sold in 19 major cities across 7 countries.
But India is a different ballgame, founders – Rashmi Ranjan Padhy, Rohit Kumar, and Kamonasish Aayush Mazumdar – found soon enough. “We had thought that in a couple of years we would be able to find product-market fit and scale up from there,” Rashmi told me.
According to Rashmi, the advantage which Carousell has is probably the market. “When we started Koove, we were looking at Carousell in Singapore and built it around that. But the adoption curve in India for used goods is very different from what is there in Singapore or the US or Canada. In India, a used-goods-only application is very tough to sustain. This was the first hurdle we faced,” he explained.
“Used goods still carry a cultural stigma in India,” he added, giving the example of OLX and Quikr, which took about eight years to get a foothold in the market. “For a used goods segment to work in India, you would really have to be spending a lot of money and a lot of time to establish yourself in the market,” he said.
That’s why Koove pivoted to Yappily in July 2016.
The ticking clock and the elusive product-market fit
But Yappily was an entirely new domain for India: social-aided commerce. In other words, an online flea market, which has thousands of micro-sellers and small businesses interacting with buyers and selling niche, non-mass-produced products – from handmade glassware to natural lemongrass soap.
“We believed that it was the right time to build a social-aided commerce platform. We aimed to have our users interacting on the app on an everyday basis. And we set a tall goal of finding the product-market fit within six months. But unfortunately, it takes more time to build that,” Rashmi said.
We realized that to reach an adoption level where people would start using the product on an everyday basis would take much longer than we expected.
When Tech in Asia interviewed Yappily last December, it was working closely with over 1,200 unique sellers – both online and offline – and had more than 500,000 products on its platform. Rashmi’s co-founder Kamonasish had told us that Yappily had over 17,000 users by then.
“When we started working with the micro-sellers, we realized that to reach an adoption level where people would start using the product on an everyday basis would take much longer than we expected,” Rashmi said candidly.
“Given the funding scenario and the mindset in India, we do not have the luxury of time anymore,” he added.
This January, the founders and the investors sat down to evaluate their runway and found that “it looked like it would take another year to reach a product-market fit.” While there was still money in the bank, it didn’t look likely to last till Yappily found its foothold.
“We had not burned the entire capital that we raised. But we realized that we wouldn’t reach the product-market fit even if we burn through all of it. So we decided to return what was left of it to the investors and shut down operations,” Rashmi said. He did not disclose the amount that was returned to the investors.
Rashmi still believes in the concept of Yappily. “There is a lot of opportunity in the social aided commerce segment,” he told Tech in Asia. “Hopefully, some time in the future, someone or I might build it,” he added.
In India, founders are very reticent to talk about mistakes or failures – to use a harsh word. But Rashmi is determined to help other entrepreneurs learn from his experience of running Yappily. And we can expect to hear more from him soon.
Disclosure: Yappily co-founder Kamonasish Aayush Mazumdar recently joined Tech in Asia as its head of marketing for India.