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"Learn from other people's mistake"

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To sum it up, something really went wrong with Doodhwala and we just don't know what exactly happened with them. Although we know that there are several reasons why they failed which are listed above.
Please note all mistakes that they made so that when you start your own startup, you can avoid them.
We wish all the best for our future Entrepreneurs.

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Early Days –  Doodhwala was started in 2015 with a vision to bring fresh farm milk directly to customers and had a tagline of “India’s Largest Fresh Milk Delivery App”. After Bangalore, they expanded into 2 more cities – Hyderabad and Pune. Both of the co-founders started the operations and scaled a 5 member team to a 400 member team in just 3 years, making Doodhwala India’s largest subscription based E-Grocer.

Marketing Strategy – They often marketed themselves as a one stop solution to have fresh unadulterated milk and various other dairy products at your doorstep.

Funding – Doodhwala raised a total of $2.4 million in funding over 2 rounds. Their latest funding round was held on February 23, 2018. It was funded by 2 investors only. The 2 investors were as follows:-

Tom Varkey – $150,000

Omnivore – $2.2 million

Controversies –  When we researched the story of this startup, we came across multiple reasons why they failed. If there was just 1 reason, they could have saved themselves from failing but they went down like the titanic. The 7 reasons were as follows:-

1. They were burning Too Much Cash,

2. They were operating on Low Margins,

3. The Acquisition Cost of a customer was too high,

4. Use of Excessive Discounts and Cashbacks,

5. They faced a lot of competition from other startups like Ninjacart and also from big companies like Big Basket and Grofers.

6. They didn’t receive a fresh round of funding from their investors. This might have saved them from stopping their operations.

According to a vendor, they owe Rs 6-7 crores to around 30-35 vendors in total.

Both of the co-founders are absconding and their phones are continuously switched off. Unable to get their money, some vendors stopped supplying products to the company in September 2019 due to unpaid dues.

Radha Krishna, who was the marketing head for Doodhwala, had documented a protest against the founders. This case filed on October 22, 2019 was over unpaid pay from July-September, 2019. He asserted that they owed Rs 2.88 lakh to him. He also said that around 60-70 employees have not been paid. An employee says he is yet to receive his salaries and is owed over Rs 3 lakh.

One vendor Manjunatha K, who owns a company called Adern Creamery Pvt Ltd, supplied milk to the startup. In his complaint, he said that the founders have not paid him his dues for the milk he supplied between June 1 to September 12, which amounts to Rs 17,42,000. As per his complaint, on September 15, Doodhwala gave him a check of Rs 9.6 lakh, which bounced.

Rahul Partners, managing partner at Lokal Buzz Events and Promotions, said that the company had done some promotional activities for Doodhwala, for which it had submitted 8 to 9 invoices, out of which 4 are pending. Doodhwala owes Lokal Buzz Rs 1.38 lakh, which it hasn’t paid for the last 6 months.

Several users also complained of their money getting stuck in Doodhwala’s wallet after it handed over operations to Freshtohome.

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Akash Agrawal is a Manipal alumni, who graduated as a Mechanical Engineer in 2010. So, after the graduation, he worked as a Executive Director at Uni Profiles (Pvt) Ltd. Then, in 2015, he co-founded doodhwala.

Now, he is also an investor at Earlsfield Capital.

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Ebrahim Akbari grew up in Muscat where his father had his business. He came to India for his graduation. So, he completed a BTech in Electronics and Communication Engineering from Manipal Institute. After completing the course, he moved back to Oman to join the family business. But, he moved back to India again in 2015, to be a part of the technology space and that’s when Doodhwala was born.

Now, he is an investor at Earlsfield Capital. It is a UK based fund focused on the leapfrogging technology & technology enabled business models across India & emerging markets

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They have more than 70 varieties of milk and they deliver groceries also. Not only that before the 7 am delivery service they give to their customers, the price was also lower than the MRP with free home delivery and also got the funding of Rs 210 crores. Then you might be thinking that having all the reasons why they still fail.
So we will tell you 5 major points of their failures:

5 Major Reasons of Failure of So Much Successful Startup:

1) Negative Cash Flow:

First let's understand the meaning of it. In any business there are many types of expenses like management expenses, operational expenses, marketing expenses etc. Now in grocery business there is a requirement of very high working capital and second is high customer acquisition cost. Ideal profit margin is also 5-15% and zero customer loyalty as customers are very price sensitive. So expenses in this organization have increased as compared to revenue.

2) No Competitive Advantage:

DOODHWALA doesn't have any competitive advantage. They were selling milk and groceries, other businesses like Grofers and Big Basket were also doing all this work . DOODHWALA has less funding as compared to Grofers or Big Basket, as they have less funding they were not able to give much discounts to customers. On the other side Grofers, Big Baskets have more funding and they are able to give good discounts to customers and they have larger customer retention.

3) Lack Of Planning:

There are two types of Expansion in business: “Steady Expansion” and “Over Expansion”.

Steady Expansion means you are expanding up your business within the capacity of resources and management. Over Expansion means you are expanding up your business beyond the capacity of your resources and management. That is what DOODHWALA has done and the result is in front of you. In order to run a successful business you should have proper planning for it.

4) Wrong Hiring:

It is said that ”If you hire the right person at the wrong job then you will run out of your job”. First mistake they have done was wrong hiring means bringing up the wrong person in the organisation and after that the second mistake they have done was over hiring. The people whose need was not there they also hired them also because of which their expenses increased very much.

5) Overdependence:

“Investor is only a pinch of salt to your dish”.

They were very much dependent on investors money. When you depend very much on investor then you don’t work on your own & also demand for fund for work. You are burning up cash also of investor money and after that you have zero sustainability. Then in result your business gets shut down which exactly happens with DOODHWALA.

So this was the whole case study on DOODHWALA failure.

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"Great business model, incapable founders"

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The food delivery business can be very risky because the customers expect a certain quality. Most people do not compromise on the safety & standards when it comes to food products. The journey of a company may also meet unforeseen circumstances that force it to shut down.
Doodhwala is one such startup that had to end the business after just 4 years of starting business.

Doodhwala is a hyperlocal delivery startup from Bangalore that delivers a large variety of fresh milk straight to home. The name comes from the Doodhwalas in our country who bring milk early in the morning. It was founded by Aakash Agarwal & Ebrahim Akbari in 2015. Doodhwala delivered more than 30,000 litres of milk each day before 7 am, out of which 60% was in Bengaluru alone. Doodhwala connected with a large number of milkmen to get their supplies. The team proved that technology was its biggest strength. All that they did at Doodhwala had an innovative approach to it. Their primary focus was on getting a low-cost supply. Other than dairy products, this startup started expanding fruits, vegetables, meat and other food products.

In 2018, they had the most reduced operational expenses in the business. By the end of 2019, Doodhwala announced that the startup was closing down due to unfavourable circumstances. Doodhwala was operational in Bengaluru, Hyderabad and Pune by the time they shut down.
They passed over their consumer base to FreshToHome.