PepperTap Shuts Operations in Mumbai & 5 Major Cities, Layoff 400 Employees; Is Hyperlocal Delivery Bubble Bursting?

Peppertap, the hot shot hyperlocal delivery app which promised to become a strong competitor to Grofers and Big Basket has finally lost patience. In a major move, they have decided to exit strong markets such as Mumbai, Kolkata, Chennai along with Ahmedabad, Jaipur and Chandigarh with immediate effect.

Around 400 employees would be laid off, which mainly includes delivery men across these 6 cities.

Interestingly, in December, 2015, Peppertap had secured a Series B funding of $40 million, which was powered by Snapdeal, Russia’s Ru-net, Japanese private equity firm JAFCO & BeeNext and venture debt firm Innoven Capital. Existing investors in Peppertap: Sequoia India and SAIF Partners also chipped in with some funds.

It seems that the new VCs want Peppertap to operate in a stealth mode, without wasting time and energy in non-performing markets.

As per official statements released, it appears that Peppertap wants to streamline their operations, and focus only on those markets which are giving them returns.

Navneet Singh, co-founder and chief executive PepperTap said in a statement, “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.”

Last month, rising hyperlocal delivery app Grofers had exited 9 cities, majority of which were Tier 2 and Tier 3 cities. Grofers had provided explanation that these smaller cities are not yet ready for ecommerce.

However, Peppertap is exiting metropolis such as Mumbai, Kolkata and Chennai; How will they explain this situation?

Advertisement & Promotions Aren’t Working Anymore

It seems that the end user is now saturated with excessive advertisements and promotions of such applications/services.

As LiveMint reported, Grofers and Peppertap together spent around Rs 12 crore in creating advertisements for TV, Radio, outdoor billboards and more, in order to create buzz and traction for their products.

But the ambitious founders of these hyperlocal services are slowly realizing that blasting such ads won’t cut to the chase. Retaining existing customers, delighting them with newer, sharper product features and building a customer-centric brand value seems to the new mantra for them.

As Navneet Singh explains, “We are digging our heels in for the long term. We will focus on building a stellar customer experience by providing additional categories and services that differentiate us from our competition in cities where we continue to operate in,”

After this restructuring, Peppertap will only operate in Delhi-NCR (Gurgaon, Noida, Ghaziabad and Faridabad), Hyderabad, Pune & Bangalore.

Started in 2013, Peppertap claims to process around 7000-8000 orders a day. Till day, it has received total funding of $51 million. We will keep you updated as more details come in.