In December 2018, we made a series of tech & internet predictions for different regions: Southeast Asia, India, Latin America & Middle East

As 2019 draws a close, let’s review these predictions: how many did we get right? Which ones did we get terribly wrong? And which are the ones that are too hard to tell?

Let’s look at India in this post. As usual, we highlight those we predicted accurately in green, those we got wrong in red, and those which are not clear cut in blue.


1.Profit is still elusive for ALL e-commerce platforms

We wrote this in December 2018:

“Low basket size, high logistics cost, heavy spending on discounts and advertisements with low sales conversion rate, and high commissions are some of the reasons. With the competition intensifying, e-commerce players will continue to burn cash in order to not lose market share.”

A number of movements happened in the e-commerce space this year: eBay’s US$150 million in PayTM mall, Warburg Pincus’s pledge of US$500 million in warehousing; and the resurrection of Snapdeal.

People are still bullish about the long term prospects of this market.

While telcos are finding ways to finally make money now, maybe ecommerce can as well, if scale and valuation are not a concern? 

2. Social commerce continues to attract investment, not gross profitability

We can quote Pratik Poddar, VP of Nexus Venture Partners, in his guest post on TLD:

“However, we are learning that traditional e-commerce platforms don’t tap into all the natural buying behaviors of a large proportion of Indians. In a “family-oriented” economy like India, most consumers have traditionally made purchases along with their friends or relatives or based on a trusted recommendation. 

“E-commerce 2.0” startups are tapping into this behavior by leveraging existing platforms such as WhatsApp and Instagram to facilitate recommendation leading to transactions. 

Reseller models like Meesho, Shop101, and Glowroad where individuals recommend items to people on their network through social media platforms have gained impressive traction and are a win-win for all the parties involved. Resellers, typically stay at home wives, are empowered to start a business of their own, and customers can discover items that are better curated for them. 

Newer models like commerce on top of video-based product catalogues, live streaming by sellers, social media influencer based selling, WhatsApp based sharing for group purchases, WhatsApp based retailers, etc. are now popping up and showing immense potential. “

3. Delhivery continues to lead delivery space, though competition continues to intensify in the last mile space

Although there are tonnes of complaints on social media about Delhivery’s service, we believe anyone else in Delhivery’s position (in terms of volume and market share) would face the same. 

The question that puzzles lots of investors at this stage is: is the valuation justified? Then again, that can be said about many business models in India and in emerging markets in general. Question is how bullish you are with this market? 

4. Club Factory officially gets stung by the government; more Chinese e-commerce players enter during the first half of the year

We wrote the following:

“But the cross-border e-commerce model is still in the grey zone because the Indian government has banned foreign companies from engaging in integrated retail business in India in order to “protect local SMEs” (that is why Walmart has been lobbying for many years and has been unable to enter India).”

Indeed, after the elections, the Indian customs started moving. Since June the parcel route to deliver cross border goods to Indian consumers has literally been shut. This was the preferred route of many independent Chinese cross border sites or platforms, including SheIn and Club Factory.

Club Factory pivoted afterwards, onboarding local sellers with local products (but still sells quite a bit of cross border stuff). The shift was well executed. 

5. WhatsApp payment fails to take off

The beta test has been going on for more than two years now – and Facebook is facing repeated delays on officially launching WhatsApp payment in India. The main hurdle is regulators – whether they are convinced that all the transactional data will reside on Indian soil. We learnt that Facebook has prepared the audit documents for submission – however, as of now, we are not entirely optimistic that all hurdles will be cleared by this year.

In June, the news was Whatsapp Pay was “ready to launch”; and in October Zuckerberg said Whatsapp Pay will be launched soon. This will probably go on for a while. 

6. Investors are still struggling to identify good early-stage companies; many VCs go into seed investment/incubation

“To solve this issue, we expect more early-stage VCs to move even earlier, building incubators and even ventures, following what Kalaari has done with KStart.”

It seems, though, instead of struggling to identify good companies, the improved infrastructure and regulatory environment has spurred a lot of innovations. The question that still can’t be answered, though, is how to exit. 

We feel that we can’t yet draw a conclusion to this prediction – so we leave it blue. 

7. Seeking new growth, major smartphone manufacturers go into venture capital 

It is quite obvious that in addition to Xiaomi, other phone manufacturers are setting up investment/incubation teams. Oppo’s investment team also spend quite a bit of time in India this year. The results will take some time to be clear. 

Btw, you should know that OnePlus and Oppo are very much related. 

8. More entrepreneurs enter the fray to build direct-to-consumer brands

“Mobile internet has been the biggest enabler for new brands because they have the ability to reach out directly to consumers, through social media and through e-commerce. We expect more direct to consumer brands, good ones, to continue emerging in 2019.”

While we see more D2C brands being created, to categorise this as a major trend is still a bit premature. A friend who recently gave up his D2C business said that the infrastructure is still patchy – figuring out the supply chain, online distribution and payment collection together in a scalable manner is not easy at all.

9. Fintech lending would still attract big capital, though only the ones with good core of risk control and data would increase in valuation

We wrote:

“India’s fintech sector has generated a large number of well-funded startups over the past few years, covering various segments including SME financing, consumer credit, marketplaces and SaaS tools. More than $40 million in financing for a startup in this sector is not news anymore.

That said, the market is still in its infancy, especially consumer-facing business models. Regulators (we have to say that Indian regulators are usually very very smart) are keeping a close eye on the sector as well.”

Middle of the year when we met a VC veteran in the country, the vibe we got was that since UPI, new, attractive fintech models are emerging fast – almost every week.

You see interesting models like Open raising significant money – the innovation game continues here. 

10. Late-stage Chinese money still prefers to invest, instead of acquiring

“The sentiment of Chinese strategic investors towards the Indian market is those big opportunities are not to be missed, but at the same time, many are not confident in the short term (rightly so).

Also, India, though geographically much smaller, is a much more diverse country than China. To run a subsidiary in a vast foreign country, you need to be able to slowly sink in and plough. Mountains of challenges need to be overcome along the way.

Therefore, strategic investors are making bets in a way in which we see as not wanting to miss the boat, rather than making outright acquisitions to run the companies themselves.”

Over the last half a year, the sentiment continues that Chinese players are continuing to tour the market, however actual investments are few and far between. Later stage investors will have more pressure and fewer options to exit – this could be a good hurdle to overcome.

In the meantime, large strategic investors like Alibaba start to find their portfolio companies ‘over-valued’ too. There is a recent re-org at the group investment arm of Alibaba – it would be interesting to see whether that brings any shifts to their approach to India. 


The market is still vibrant, the investors still very bullish. Should we worry about the short term economic slump and protests, or should we look at the long term? And how patient are you for the long term?

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].