It’s been a bad day for Indian e-tail unicorns. A day after the co-founders of both Flipkart and Snapdeal were seen dispensing startup wisdom at an international startup conference in Bangalore, there is bad news coming in from both the companies. While Snapdeal’s under fire for having fired 200 people in its customer service department, Flipkart has shut down the groceries arm, Nearby.
Nearby was launched as an experiment by Flipkart in October last year, a little less than 5 months ago. With Nearby, Flipkart had aimed to get into delivery of groceries and everyday staples. The service was available through a separate app which had over 100k downloads. The service was available only in Bangalore, but poor demand and a lack of margins had plagued the service since its inception.
After being touted as the next big thing last year, grocery startups have had a tough time in the last few months. Grofers had shut down operations in 9 Tier 2 cities citing low demand, and PepperTap had followed soon after, exiting from 6 cities and laying off 400 employees. Earlier, biggies such as Amazon and Ola had joined the grocery delivery race, each launching their own products.
Experts have questioned the grocery delivery model that most firms operating in India have adopted. Most firms operating in this space don’t own inventory, and this leads to razor-thin margins. The low order sizes that are common in India have made free deliveries, a service that the Indian consumer has come to expect, economically unsustainable.