India’s third-largest grocery delivery service is no more.
On April 22, PepperTap, a 17-month-old Gurgaon-headquartered startup, said it will shut its grocery delivery operations. Promoters Navneet Singh and Milind Sharma, who had earlier worked together at logistics startup Delhivery, will now focus on expanding PepperTap’s own logistics business.
Founded in November 2014 by Singh, an Indian Institute of Management-Ahmedabad graduate, and Sharma, PepperTap was built to deliver groceries from local stores to neighbourhood customers within two hours. Orders could be placed through the company’s mobile app or website.
Like most business-to-consumer (B2C) startups in India, PepperTap was in hyper-growth mode in the first year of its life. By October 2015, the company had expanded business to 17 cities and was delivering an average of 20,000 orders per day. Operating on an inventory-less model, the startup was capital-light.
There were three main reasons for PepperTap’s collapse:
1. Weak Technology.
2. Sudden and Unmanaged Expansion.
3. Heavy Discounts.
The company will now focus on expanding the logistics business. “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,” Singh said.
According to industry analysts, hyperlocal delivery startups like PepperTap, BigBasket and Grofers have been feeling the heat of a slowdown in investment as they operate on wafer-thin margins and end up losing money on every delivery.