PepperTap Shares The Reasons For Shutdown In Brutally Honest Post

It’s never easy to see a dream die, but it’s even harder to write a thoughtful blogpost about why it did. PepperTap, hours after announcing that it was shutting down its operations late last night, has come up with a brutally honest post detailing its journey and the reason why they chose to exit the grocery delivery business.

peppertap shuts down

Here are the reasons that caused PepperTap to shut down.

1. It grew too fast, too quickly: “In the race to pepper the whole country with PepperTap, we had brought too many stores online far too quickly”, the company admits. PepperTap was founded in November 2014, and was serving 20,000 daily orders by October 2015 across 17 cities. PepperTap raised a total of $51 million through its existence, which roughly translates to Rs. 1 crore per day for the period it was operational. This rapid expansion meant that it couldn’t scale its systems as fast as it would’ve wanted to. “Our customers were, at times, unable to see the entire selection of items from a store and sometimes even essential items were missing from the catalogue visible to them.

2. The unsustainable discounts: PepperTap says that it hoped to entice customers to its service through discounts.  “We were in it for the long-haul and this was the way to build a loyal customer base by showcasing the quality of our service, and getting them to adopt it as a way of life. But the company was losing cash on every order. Losing cash on every order (no matter how small or how controlled or how goal-oriented the burn) meant one day we will run out of cash. We couldn’t shake off the feeling that we were walking (not racing like some other companies) towards the edge of a cliff hoping that things will get better before we reach the abyss.”.

3. The difficult funding environment: If 2015 was the year when VCs opened their purse strings for any idea with even the most remote potential, 2016 was different. It started with Flipkart’s valuation being clipped by Morgan Stanley, and investors were suddenly being a lot more circumspect with their cash. It didn’t help that its chief competitor, Big Basket, managed to raise a $150 million round in March.

But PepperTap isn’t quite gone yet. While its grocery delivery service will shut down, it is pivoting to a logistics company that will manage deliveries for e-commerce companies. And in it’s demise, it has pointed out mistakes that other players in the space are probably making.

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