Sectors badly hit due to Demonetization

In a bid to promote cashless and digital economy, PM Narendra Modi announced demonetization on November 08. Modi scrapped old Rs 500 and Rs 1000 notes, saying this will crack a whip on black money hoarders and encourage more and more Indians to open bank accounts. Since Demonetization, banks have received at least Rs 6 Trillion and this figure is likely to go up. Many sectors were hit as people faced cash crunch and did not have new notes to spend. Sales of daily and luxury items were also hit due to Demonetization. Here are few sectors that have been impacted due to note ban.

E-commerce – The sales of e-commerce companies came down to 60-70% and there was a significant drop in orders, especially the cash-on-delivery ones. Despite rolling out multiple offers, the online marketplaces have seen a drop of sales costing as much as Rs 10 Lakh too.

Smartphone Makers – Mobile phone makers and sellers are facing a tough time as people have no cash to buy phones. Many have delayed their phone launches due to demonetization.

Automobiles – In November, utility vehicles sales are likely to go down 40-50%. Sales of two wheelers and luxury cars are the worst hit.

Travel and eating out – Travel sector has been hit as foreign travellers coming in are in a fix over note ban. Even Indians are not opting to travel overseas, due to demonetization. Restaurant reservations in Delhi – NCR have gone down by 28%.

Movie Theatres – Although people have started booking tickets online, even the entertainment faced the brunt of demonetization. Many of the movie halls saw a drop in viewership when demonetization was announced.

Best startup sectors in 2015

With the year almost drawing to a close, there are startup sectors which turned out to be major players in coming years. Beginning early this year, there was a great rush of venture money. As a seed round of a million dollars became the new norm, startup started mushrooming throughout the country. Some of the sectors that saw significant interests are IoT and Wearables, Hyperlocal, Food Tech, Logistics Management and Local Services Marketplace.

With the likes of Grofers, BigBasket and Pickingo vying for attention as on demand delivery partner, there is an explosion of Hyperlocal services. From delivering nuts, vegetable, to transportation services, Hyperlocal startups have managed to grab their fair share of eyeballs and investor money. However, this sector has become very competitive and it will be interesting to see how these startups scale and evolve in the future.

According to startup analyst firm Tracxn, about 90 startups and 50 plus startups have been founded in 2014 and 2015 in Logistics Management. Top funded startups include the likes of Delhivery, TinyOwl, Ecom Express and Gofers. The sector has seen a lot of interest because of the growth of ecommerce in India. This has led to the emergence of local delivery startups, food delivery startups, intra-city, inter-city, overseas, ecommerce shippers and freight aggregators.

The entire Internet of Things (IoT), which has meant over a billion dollars have been invested in startups in the IoT space globally over the past few months. Big VC firms like Sequoia Capital, NEA, Andreessen Horowitz and others have made a sizable investment in the space. On the other hand Wearables segment has seen a number of significant products taking over our life. Fitness bands are the most popular Wearables today, followed by smart watches. It is not surprising that many startups now consider Wearables the next big things.

Food tech is perhaps the most surprising sector. This has been mainly because the food and restaurant industry till now has been largely fragmented with little or no tech adoption. Startups have figured out a lot can be done in the aggregation business and in delivery. The sub segments that have done well in the space include both eat at home ordering and delivery, restaurant discovery and booking, in restaurant payments, office food delivery and food aggregators.

In a city where we are increasingly busy, availing services may not be easy. Whether one need a doctor, plumber, electrician, drivers, a bunch of startups now help in on the desired service provider. Startups like UrbanClap, Taskbob, LocalOye and Qyk have raised funding. Investors active in this field are SAIF Partners, Accel Partners, Tiger Global and even Snapdeal cofounders. While the primary way to avail local services have been through online search or classified platforms, Local services marketplace make it seamless. This has led to increasing popularity of startups.