PepperTap closes grocery delivery operations!

PepperTap closes grocery delivery operations!

Gurgaon based hyperlocal on-demand grocery delivery startup PepperTap has confirmed that they will be shutting down their grocery delivery business and will instead concentrate on it’s parent company, Nuvo’s reverse logistics business which is already established and has partnerships with major clients like PayTM, SnapDeal, ShopClues etc. and also reported a minor profit of 87 thousand rupees in 2014 on the back of revenues of 19.5 Crores.

 Which is another way of saying the company’s dead in the waters.

 The PepperTap office would like you to believe that the company is just reorienting its "business focus" and that it’s just full steam ahead for them.

 But there’s no denying the fact that when a company ditches a product line they raised several millions on the back of, it’s just bad news for them. 

PepperTap, in April 2015 raised, upwards of $10 Million in Series-A funding from Sequoia Capital amongst others.

 Again in the September of the same year, the startup raised $36 Million in Series-B funding from major players of the Indian ecommerce market like SnapDeal which also picked up a minority stake in the firm.

 All the funds being flown in this fast for a company launched in just the November of 2014 enabled the company to acquire a struggling startup JiffStore which also served in the hyperlocal delivery segment and to expand operations in multiple cities while dishing out full page ads in major dailies across the nation.

The company then made the classic mistake of trying to spread it’s wings too quickly and expanded to a lot of Tier-I and Tier-II cities without having a key market to fall back on in a catastrophic scenario.

The startups had made all the buzz for the wrong reasons some time back as well, when in February 2016 the startup ceased operations in 6 cities including major markets like Mumbai, Chennai and Kolkata. 

In India, the hyperlocal delivery segment is already saturated with major players like Grofers etc. who have also known to be scaling back operations to ensure efficiency. In fact, behemoths like FlipKart also tried their luck at the hyperlocal delivery segment before quickly calling their operations off as well.

What does that tell entrepreneurs?

The most important lesson in this story of another hyperfunded startup biting the dust would be this. No amount of VC Money can help your startup if your cash to revenue equation isn’t in your favour. A startup doesn’t always fail because the product couldn’t cut the mustard or the team didn’t just gel together. One of the simplest yet forgotten reasons may be that the math never did add up. 

You may pick up any segment in the Indian space like travel or foodtech or online payments etc. In every segment you’ll inevitably find dozens of firms vying for your attention. Why?Because their VC’s money enables them to.  But the most important lesson here is to create a viable product which may survive with or without a venture capitalist’s money.

Another lesson may be that any startup, before aggressively expanding, should ensure footholds in key markets and ensure a steady stream of revenue before spreading your wings too far!

Got something to say about the news you just read? Sound off in the comments section!Read more stories like the one you just read, visit us here!Team BigStartups!