Visitors to the Localbanya website are greeted with this message: “Your banya is upgrading his technology and services. We will be back shortly with more exciting features and a far better delivery experience. We can’t wait for you to experience the new and improved Localbanya”.
Meanwhile the inside story might be very different. Employees have been notified that operations were being suspended and this has happened the second time in the last 2 months. 40 employees have not been paid their salaries for the past 2 months and are now moving court, after failing to get any police intervention.
The company recently re-branded itself, “We had an expansion road-map in place for 2015, we felt that one of the first things that needed to be done this year was the rebranding. The entire experience and anticipation has been a great rallying point for all our people. There is an atmosphere of excitement within our team, and the process and result has been a great tool in uniting everyone,” according to Roshi Choudhary, one of the co-founders.
Following the footsteps of online food aggregators
Localbanya seems to be following the footsteps of other online convenience stores like Zomato and Tiny Owl, who facing a financial crunch have terminated the services of employees. In fact, the employees had to resort to gherao their management to extract some sort of assurance or consolations. Two of Localbanya vendors too have confirmed that their services were terminated due to funds shortage.
Localbanya officials refused to accept that financial funding was a problem and attributed it to attrition. “Our current team is well structured and the organisation continues to attract talent by virtue of the strong brand that we have built,” said founder Karan Mehrotra.
Other opinions that matter
Neha Asthana, an expert in talent acquisition, is of the view that low margins in online food and groceries retailing demands a constant cash flow, “This is more so in food tech startups where expectations are high and growing all the time, while margins are very less,” she said.
Experts opine that logistics and consumer promotion alone contributes to approximately 20% of the total costs for online grocers. “With huge competition in online grocery retailing space, the companies should now look at how to make the business sustainable and generate profit,” advised another source.
The Indian food tech and delivery startup ecosystem has been in turmoil recently with TinyOwl and Zomato laying off workings, and hyperlocal delivery startup Pickingo shutting shop.