Why PepperTap failed?
Chetan Vashistth, Co-Founder Mads Technologies in Noida, earlier used to manage ground operations of Peppertap at East Delhi, Ghaziabad, Noida, Gr Noida locations. Few months back, he left the company to start-up.
When we asked him about possible reasons why grocery deliveries ‘work with Peppertap, he shared that themanagement was not able to control unnecessary expenses, and relied on discounts far too much.
He said, “We created artificial demand by giving brainless discounts (as everyone is doing same in this space). Due to huge discounts (proportionate to number of orders), we had to manage huge staff and we went 4 times of optimized number, in terms of ground staff head-counts.”
As per Chetan, and some other previous employees we talked to, Peppertap normally spent between Rs 400-800 to churn out revenue of Rs 100. Such huge burn was ofcourse, not sustainable, and there had to be a full stop.
As per Chetan, “You can’t doubt the capability of the founders and team at PepperTap. Parent Company NuvoEx is doing awesome in reverse logistics. However, during my tenure with PepperTap, I felt that we mishandled the investment and reacted too much on market sentiments.”
Another unconfirmed report claims that investors have lost around Rs 300 crore in their investment; which has been written off.
Last September, Snapdeal along with Russia’s ru-Net, Japanese equity firm JAFCO and BeeNext Ventures, and existing investors Sequoia India and SAIF Partners had invested $34 million in Peppertap, which showcased then confidence in their business model.
In fact, when Peppertap raised another round of investment in December, when Innoven Capital infused $4 million and acquired Jiffstore, a Bengaluru-based delivery start-up, hopes were raised that Peppertap can became that hyperlocal startup which can give some tough competition to Grofers and Big Basket, which are the strongest players in this niche.
But the wafer-thin margin, dependence on discount and advertisement spends to acquire customers, and huge burn rate on operations took its toll on Peppertap, and they had to buckle.
What is your opinion on the exit of Peppertap? Will online groceries ever work in India?