The hyperlocal delivery industry seems to be losing favour, if the recent trends are anything to go by. Hyperlocal companies are realising that if they need to continue in the business, they will need a more sustainable model. Some are increasing the rates in an attempt to make money.
Mayank Kumar, CEO of Opinio, reinforces this,
“Last year we had invested in creating a market and proved that food deliveries can be efficiently done in less than 20 minutes. This year, we will monetise our tech capabilities and fleet to efficiently scale our logistics capabilities.”
Hyperlocal delivery company Parcelled has altered its business to outsource the delivery to third party vendors, and will act in the position of an agent.
The move has resulted in the loss of jobs of the delivery personnel and logistics operation staff. People familiar with the developments (requesting anonymity) have cited lack of funds as the reason for the drastic move.
Hyperlocal marketplace GetNow.at has downed the shutters. The Nagpur-centred marketplace was dealing in groceries, mobiles, electronics and office supplies. An emptying purse is again the culprit for this move.
Co founder Shailesh Deshpande has admitted that finances have been the issue. He says,
“The consumer facing front of this business has poor unit economics. When we started, our average ticket size was Rs 250 but the delivery cost was Rs 50-55 and it was difficult to break even.”
Recently, Ola closed its hyperlocal delivery and Grofers stopped operations in nine of the seventeen cities in which it was operating. Bangalore based fashion store Fashionara also seems to have stopped functioning. While there has not been any official word, the company’s website and app are non-functional.
Money seems to be a major issue. The inability of start-ups to attain stability in their operations has resulted in their premature passing. While investors are willing to supply the cash, they are backing out when there is no visible returns.
Flipkart has been facing a series of devaluations by Morgan Stanley. While the ecommerce leader is playing down the occurrence, it might just be a case of putting up a brave front. Companies need to look at charting out a clear course of action and on boarding established professionals to help in the road to success.
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