“A size-able number of today’s largest, most impactful and highest-valued startups have something in common: they create new forms of trusted intermediaries,” says Philipp Kristian Diekhoner, a German entrepreneur and innovation consultant based in Singapore.
“Trust is a key enabler for economic value creation,” says Philipp. The more we trust in a product or service, the more value is created; the less we trust, the less value creation occurs. Billion dollar unicorns have been built around the nucleus of trust.
For several years Indians were denied the basic services of renting a car, return of commodities etc. which our western counterparts have been enjoying for years now. All these services were based on the basic premise of trust between the consumer and the supplier. This basic trust was never there between the consumers and suppliers in India and that’s the primary reason we never enjoyed these benefits this India. But in last 3-4 years we have seen many of these services being prevalent, whether it’s the introduction of rental car service by Zoomcar or the unconditional return by the Amazon. It’s definitely a big hit for the consumers. But just like any big hit is this just a flash in the Pan?
I thought of taking a real test of this trust and thought of trying the rental car service provided by Zoomcar in Indore. So I booked the car through the nice interface that the application provides, then paid the security deposit and reached the place where I was supposed to pick the Car. To my utter surprise I did not find a board present there which indicated that to be the pick up point for Zoomcar. Somehow I managed to reach the place after asking 4-5 persons (most of them did not know where it exists even if they stayed there for years). Once I reached the place I saw one person (completely unprofessional) overseeing 4-5 cars present in a shady place. I would have assumed this to be a fraud if I would not have seen the Zoomcar Logo on the cars present there.
After all these drama I thought I will get the car and somehow would have a better experience after that. But when I went ahead to inspect the Car what I observed completely rattled the experience and made me utterly frustrated. The window glass was completely broken but the sales person still insisted me to go ahead with the Car. I had to make several calls with the customer care and finally was able to cancel the order and get the refund.
Thousands of Indians might be going through similar experience everyday, but the story from the supplier side might not be different as well. All the big companies who portray to be the torch bearer for trust economy are going through the same phase. Whether it’s Flipkart, Swiggy, Zoomcar or Zomato most of them are making huge loss and running on the VC funding. They are indifferent to the fact assuming that the situation would change in future. When Uber started operations in India and provided the new user sign up bonus, many individuals signed up 20-30 times with different mobile numbers and got the bonus multiple times. Same is true for many companies who are giving sign up bonus.
Also the return facilities provided by many ecommerce players is exploited by many consumers. So whether it’s Jabong or Myntra the situation is no different and most of them are invariably making a lot of loss. But if you look at the Indian retail in the brick and mortar space they are making substantial profit whether it’s the new entrant DMART or the established player Future Bazaar. Returning any items in these stores is not as easy as Jabong or Amazon. So it can be inferred that the bottom line of a company is inversely proportional to the extent of trust they pose on the consumers.
I am not sure whether this trust economy would continue in future or this would collapse and we would be back to the days where cash is the only currency for transaction and there is no value of the trust between the consume and the supplier. Only time would tell if these new disruptive companies would make profit and would be the behemoths in the corporate world or would diminish with the flow of time. Let’s wait and watch.
Premjit is a lead blogger and writer and publishes his contents in many blogs and websites. Premjit writes about technology, economy and lifestyle. He has been in IT industry for more than 13 years and currently pursuing MBA from IIM Indore.