Sequoia Capital backed highly funded grocery delivery startup PepperTap is closing its hyperlocal delivery operations in the next one month.
The company plans to focus on building a logistics company for eCommerce firms.
It already runs a reverse logistics arm through its parent company Nuvoex Logistics Pvt. Ltd with clients like Paytm, Snapdeal and Shopclues. Nuvo had posted a profit of Rs.87 lakh on revenue of Rs.19.5 crore in 2014-15.
"They are shutting down grocery delivery to focus on the logistics business," said one of the sources familiar with the development. "The company has substantial cash in the bank to scale that (B2B logistics business)."
Peppertap plans to aggressively build forward logistics technology to complete the whole B2B stack, the person added.
Earlier in February, PepperTap closed operations in six cities such as Ahmedabad, Chandigarh, Mumbai, Kolkata, Chennai and Jaipur. Prior to that, in September 2015, it had rolled back operations in Agra and Meerut due to non-acceptance of the concept in the markets.
Started in 2014 by Navneet Singh and Millind Sharma, PepperTap app allows users to look into more than 5000 unique products across categories including grocery & staples, fruits & vegetables and household goods. However, one source claimed that the company was processing less than 1,000 orders since last month and had laid off over 200 employees last week. As of February this year, the company was delivering over 20,000 orders each day.
Till now, PepperTap has raised $50 million funding from investors like Sequoia Capital, SAIF Partners, Innoven Capital, Ru-net, JAFCO and BeeNext. In December 2015, it had also acquired Bangalore-based hyperlocal grocery marketplace Jiffstore.
Prior to PepperTap, Localbanya and Townrush had to shut down operations. Biggies like Paytm and Flipkart also launched on-demand grocery verticals but pulled back soon. Softbank-backed Grofers also backed out from nine cities in January this year and Shadowfax restricted its operations to only three cities to focus on generating cash flows and achieving operational efficiency.
The recent deals in hyperlocal delivery space include BigBasket’s $150 million funding led by UAE-based private equity investor Abraaj Group; Zopper’s $20 million Series B round funding led by Tiger Global and Nirvana; Shadowfax’s $8.5 million Series A round led by Fidelity’s proprietary investment firm Eight Roads Ventures and ZopNow’s $10 million round which was led by San Francisco-based Dragoneer Investment Group and others.
BigBasket has recently launched ‘Express Delivery’ service which allows users to receive products in just 60 minutes.
