How Unsustainable Growth Plunged AskMe

Surely, many of us would've heard about "AskMe". Once highly recognized, it failed and literally adhered to the adage old saying "Don't bite off more than what you can chew". On 19-Aug-2016, AskMe shut its shop which left about 4,000 of its employees jobless. A late entrant in e-commerce, AskMe thought it could make up for the lost time by tapping its massive database of 15 million SMEs.

Oyo, once one of India’s fastest-growing tech start-ups, is now rapidly scaling back. Oyo has pulled out of 200 small Indian cities, cutting back 65,000 rooms (1/4th of the total), layed off 2,000 employees worldwide and slashed other costs as it faced immense pressure from its biggest investor, SoftBank, to curb vast operating losses!

An article by Business Today lists 6 major reasons, from weak technology to aggressive acquisitions that were responsible for the AskMe's failure:

1. Lack of Focus: At the heart of the problem was company's lack of focus. AskMe tried its hand in almost every online segment - ecommerce, grocery, travel, furniture, classifieds and payments - losing out to the more focused players in each of these categories. In each of these segments, Askme was neither a leader nor a challenger.

2. Needless Acquisitions: According to experts, AskMe possibly tripped as its owners went about buying start-ups, minions in their segments, to build a mega start-up. First, they bought BestAtLowest, an online grocery business, and launched AskmeGrocery in May 2015. It was followed by the acquisition of online furniture website MebelKart.

3. Weak Technology: Managing such diverse businesses requires a great deal of management bandwidth and expertise, both in technology and logistics. Unfortunately, technology was the weakest link in AskMe.

4. Inconsistent Strategy: Before it's closure AskMe was like JustDial, then it decided to emulate Flipkart, and subsequently like BigBasket. Their strategy changed every 3 months.

5. Cash Crunch: AskMe's parent Getit Infoservices revenues more than doubled from Rs 23.4 crore in 2011/12 to Rs 51.2 crore in 2014/15. Simultaneously, the net losses ballooned from Rs 54.3 crore to Rs 300 crore during the period. With such a high cash burn rate, it needed a fresh round of funding to keep going but Astro decided to pull the plug on funding.

6. Single Investor: Dependence on a single investor had hit the company's ability to raise funds. This is because a big investor keeps tight control over the company and does not give new investors much say in decisions. Getit Infoservices was 95% owned by single investor i.e. Astro Holdings.

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