Gurgaon-based on-demand grocery delivery service PepperTap has decided to shut down its operations.
“We couldn’t shake off the feeling that we were walking (not racing like some other companies) towards the edge of a cliff hoping that things will get better before we reach the abyss,” wrote Navneet Singh, CEO of PepperTap.
The founder felt that by continuing to operate in the e-grocery field where the company was losing cash on every order no matter how big or small, they might be doing a major disservice to their investors and employees. Hence, even though shutting down the business was a difficult choice but a necessary one.
“Because the unique challenges of this business are not solvable in the short term and certainly not solvable without massive injections of capital, we would have to confront this issue sooner or later.”
Great start but couldn’t handle the pressure
The grocery start-up which was in for the long-haul had a great start. Their popularity grew rapidly and investors were generous with funds.
Just a year ago Singh had shared with IndianOnlineSeller,
“We were lucky to get our first order on the day of our android app going live. We slowly grew from a humble 50 orders a day to 100 orders per day within January 2015. Today we are 125 people and 10,000 customers strong.”
A year later things have drastically changed. In February this year, the company closed operations in 6 top metros. Its direct competitor Grofers made it even more difficult for PepperTap to function smoothly. On top of it, the investment climate changed.
An ex-employee disclosed how Grofers’ growing business jeopardised PepperTap’s measured but well-planned growth plan,
“Overnight, the plan changed. We were told to focus on aggregation and fulfilment. We had to be faster than Grofers.”
Hyperlocal business model is the problem?
It appears to be, yes.
Big Basket, which has been asked to come clean about its business model, is the current market leader in the online grocery business. The co-founder of BigBasket feels that this ecommerce vertical can only be successful or feasible by following an inventory-led format, not an on-demand one.
PepperTap’s founder too shares the same sentiment,
“The reason BigBasket can give you deeper discounts on perishables is because they source from wholesalers and stock inventory. They don’t go through retailers. Every bit of money they make is their own.”
To be fair, the entire hyperlocal grocery & food-ordering industry is struggling at the moment.
PepperTap’s focus on logistics business
PepperTap’s goal from here on is to channel all its energy on the logistics business – parent company Nuvo Logistics. The company is going to use the knowledge it has acquired in the last year and a half while trying to solve last-mile delivery issues and fulfill the ‘on-demand’ delivery promise.
Stating that his start-up was ‘born to be a logistics company’, Singh said,
“We are already working with many e-commerce firms and have a strong reverse logistics operations. In the next few months, we will focus on strengthening our forward logistics.”
We hope that PepperTap’s transition from grocery to pure logistics pays off.