Peppertap Shuts Down Grocery Delivery Services In 10 Cities

Peppertap has decided to shut down its operations in 10 cities including large markets such as Mumbai, Kolkata, Chennai and Ahmedabad. The hyperlocal grocery delivery service will continue to operate from 8 cities. The move was chalked up to cutting costs and to turn their focus on existing revenue generating markets. The shutdown has also led to around 400 employees being laid off, mainly service delivery personnel in the aforementioned markets.  

Long Term Planning

The move to shutdown its operations was seen as surprise since the company raised nearly $35 million in funding in December of last year. The round of funding was backed by major players like Snapdeal and Russia’s Ru-net. Speaking about the operations shutdown, Navneet Singh, co-founder and chief executive of Peppertap, said, “Even though PepperTap has been able to establish itself as a leading hyperlocal grocery delivery service, given the short to mid-term investment climate outlook, we have decided to focus on depth rather than breadth. We are digging our heels in for the long term.” 

Improving In Existing Markets

More startups are continually focusing on improving their services in existing markets than expansion. Singh noted that the funds raised last year will be used to expand on their services within the highest revenue generating markets. Peppertap will continue its operations in Delhi, Gurgaon, Noida, Hyderabad, Pune, Ghaziabad, Faridabad and Bangalore. Singh said that these markets account for nearly 70% of revenues generated for the company. 

Regulating Financial Models

Peppertap, founded in 2013, by Navneet Singh and Milind Sharma, invested heavily in promotions in the past 2-3 months. Along with Grofers, another player in the hyper-local delivery sector, Peppertap spent nearly $2-3 million in marketing its services through social media, print and Youtube. As companies are investing more on marketing campaigns, investors are increasing the pressure to improve on financial responsibilities and to cut back on extravagant marketing campaigns and discounts for customers. Startups have faced significant pressure to regulate their financial model as more companies are shutting shop due to funding.