If 2015 was the year of the expansion where companies proudly showed off their growth metrics, 2016 appears to be the year of the contraction. After Grofers had pulled out of out 9 cities, and Zomato had suspended operations in 4, PepperTap has now shut down operations in 6 cities. The company shall no longer operate in Ahmedabad, Chandigarh, Mumbai, Kolkata, Chennai and Jaipur.
Interestingly, while Zomato and Grofers had pulled out of Tier 2 cities like Coimbatore and Ludhiana citing low technology adoption amongst their market, PepperTap has shut down operations in metros like Mumbai, Kolkata and Chennai. When the Grofers pullback had been announced a month ago, PepperTap CEO Navneet Singh had said that their company had no similar plans, and were planning on consolidating the cities they operated in.
“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. 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,” he said on the new development.
Singh says that this will help PepperTap conserve capital it raised in the last three to six months and will give a runway of about two more years.
The last year had seen both Grofers and PepperTap spend exorbitant amounts in marketing and advertising. Grofers had seen its valuation jump threefold in less than a year, and PepperTap had raised a mega $36 million Series B round that was led by ecommerce giant Snapdeal.
This pullback also translates into a loss of jobs – PepperTap says that it will fire 400 deliverymen who operated in these areas.