How COVID-19 disrupted the disruptors of corporate India

India hunkered down late in March as the coronavirus storm tore through the world. The lockdown, described by some as the most stringent in the world, to break the chain of infections stopped the country of 1.3 billion people in its tracks. School and colleges were shut; airplanes, trains, buses and cabs stopped; offices moved to homes and business activity came to a halt.  

The shutdown, which has since been eased gradually, dealt a huge blow to an already struggling economy. Startups, loaded with VC money and highly leveraged balance sheets, arguably faced their stiffest challenge. There was no playbook to fall back on, they had to think on their feet. Moneycontrol looks at how several tech sectors took on the challenge. Some have managed to turn the crisis into an opportunity but for others, the future still looks uncertain.

Food-delivery services

The big blow

The big question during the initial weeks of lockdown was whether food delivery was an “essential service”. Essential services that included milk, ration and medicines were exempt from lockdown. A section of policymakers felt that consumers could survive on instant noodles for a few weeks. The other felt delivery agents could become “super spreaders”, hence not be allowed. 

Food-delivery firms like Zomato and Swiggy saw delivery partners getting harassed by police as guidelines varied from state to state. Restaurants had shut down and supply lines were disrupted. Business dropped to almost zero in some cities and was barely 30 percent in other parts.

Taking on the challenge 

1 Zomato and Swiggy started campaigns to allay fears and explain, first to lawmakers and then to consumers, that food delivery was safe.

2 They brought in safety and hygiene standards for restaurant partners. Shot videos of kitchens and measured temperature of the delivery staff, all to assure customers that food packaging was virus-free.

3 They also ventured into grocery and alcohol delivery to shore up revenue. 

4 Programmes like “Swiggy Jumpstart” were launched to help restaurants restart business with small loans.

5 They shut down several cloud kitchens and other projects that were not making money. These two firms also saw layoffs and salary cuts, some of which were later reversed

Recovery

The sector has seen a quick recovery. Food delivery has jumped back to more than 60 percent in terms of volumes. In terms of value, Zomato and Swiggy claim to have reached 100 percent and beyond. Some cities saw faster recovery compared to others. Dining in has continued to be muted, though the festival season did see a jump in footfalls across categories of restaurants.

Ride-hailing

The big blow

The coronavirus forced people indoors, disrupting the ride-hailing sector. For firms like Ola and Uber, there was no business for weeks. People were not travelling or socialising. Airports, which accounted for a sizable chunk of business across cities, were deserted. 

Taking on the challenge 

1 Ride-hailing firms made a concerted effort to make drivers aware of the virus risk and how to keep themselves, the vehicle and the customer safe.

2 As some of the restrictions were rolled back and cities stirred to life, the need for cabs to be back on the roads was felt again. As domestic flights resumed, airports were partially back in business. So were drops and pickups, though far from their peak, there was some business to be done.

3 Loan moratorium from the Reserve Bank of India helped taxi drivers, who used the six-month breather to recoup and restart their business and not default on their vehicle loans.

4 They also slowed down their lending business. Ola Postpaid and Ola SBI credit cards, were understood to have been scaled down to conserve cash. Uber did the same with its financial services globally

Recovery

The ride-hailing space is still feeling the coronavirus stress as office commute remains muted. Once that picks up, volumes will be back. Also, airports are functioning much below capacity, hence drops are not back at 100 percent but consumers have started taking cabs, with precautions in place.

Live event bookings

The vital outbreak has dealt a body blow to the live-events industry that has hit ticketing platforms hard. Players like BookMyShow and Paytm which were the go-to platforms for ticket booking, suddenly had no events to process bookings for. Throughout the lockdown months and most of 2020, events have either been cancelled or put off.

Taking on the challenge 

1 Live performers went online for Zoom parties and others. BookMyShow started processing tickets for these events, giving it some business.

2 BookMyShow pushed hard for theatres to be reopened through multiple surveys and consumer studies. Movie theatres are getting back in business in a calibrated fashion but ticket sales have been slow to pick up.

3 Business was kept alive through online classes for music, physical exercise and others for which bookings were processed by these platforms.

Recovery

The recovery has been slow and painful for this sector. Experts say until there is a vaccine and people are confident of going back to their lives as they were before the pandemic, these businesses will see their traditional revenue lines disrupted. While online shows are taking place, margins are narrow, which will have an impact on their top line.

Hospitality

With people staying indoors, tourism and the hospitality industry were devastated. Softbank's blue-eyed portfolio firm Oyo, which was expanding at a breakneck speed, saw its occupancy drop drastically. Several hotel- booking platforms like MakeMyTrip, EaseMyTrip and others also saw their business drop.

Taking on the challenge 

1 Oyo started off by cutting staff strength, thus reducing operational costs. The company that had around 10,000 employees in India in early 2020 now has less than 2,500 people on the rolls.

2 It decided to shift to a lean model. It shut down divisions such as hotel renovations and focused primarily on a revenue-sharing model with partner hotels.

3 It stopped offering a minimum guarantee or even management staff at the hotel premises, which it used to do to monitor quality.

4 It will now primarily focus on technology to offer marketing to partner hotels. Its focus on technology can be gauged from the fact that it selectively gave increments and promotions to its tech team.

5 The company says it is recovery at a decent pace, most of which is coming from the economy and boutique hotels due to a sense of safety in smaller places.

6 Budget hotel chain Treebo offered a paid voluntary resignation scheme to its 400 employees, while the founders and management took 40-60 percent pay cuts. Smaller rival Fab Hotels, too, resorted to layoffs and salary cuts. It let go around 80 people in April.

E-commerce

Unlike in the West, where e-commerce was the lifeline during the lockdown, India didn’t allow these companies to operate, fearing protests from offline traders. Only essential goods were allowed during the early weeks of lockdown and that hit major e-tailers such as Amazon and Flipkart. In May, Walmart, which owns Flipkart, said its international sales got hit due to the lockdown in India. Amazon said the hit that its revenue took in India was the highest for any country in the international market.

Taking on the challenge 

1 While layoffs were the order of the day, Flipkart assured its employees there would not job losses or salary cuts and incentives would be given as planned. The company would also honour all job offers. No lay-offs were reported by Amazon India as well.

2 It appeared that the two companies knew that once the government would allow non-essential deliveries, the business will bounce back because people would still be hesitant to go out and shop for the fear of infection.

3 Amazon, in fact, took a plunge into the capital-guzzling food-delivery market when the order volume for sector leaders Swiggy and Zomato was at an all-time low.

Recovery

Despite the low disposable income of buyers, the first week of Diwali online festival sale saw gross merchandise volume (GMV) rising to around $3.8 billion, a 50 percent growth from the year-ago period. Many people who were wary of ordering online have now started using these platforms and a chunk of them are likely to stay on even when things return to normal.