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Rise and Fall of Peppertap
PepperTap, launched in November 2014, was an on-demand grocery delivery app that expanded to 31 cities within a year but ultimately shut down in April 2016 due to unsustainable business practices and competition. Despite securing $51.2 million in funding and being one of India's top grocery services, it faced challenges like rapid expansion, ineffective inventory management, and high customer discount expectations. The company's failure reflects the difficulties of establishing online grocery services in a market dominated by local stores and consumer loyalty to traditional shopping methods.
Rise and Fall of Peppertap
- 1.
- 2. INTRODUCTION • Launched inNovember 2014, PepperTap allows customers to buy groceries on demand through an app. The company started out by providing services in Gurgaon. • PEPPERTAP employees : 2000(approx.) • PepperTap operated in Delhi-NCR, Pune, Hyderabad, Bengaluru, Chandigarh, Jaipur, and Chennai • PepperTap was the third- largest online grocery delivery service in India. • It closed in April 2016 due to lack of technological and financial resources. LOGO OF PEPPER TAP
- 3. HISTORY • PepperTap wasfounded by Navneet Singh and Milind Sharma in November 2014. • Nuvo Logistics Pvt. Ltd was its parent company • PEPPERTAP provided online shopping for groceries and household items through mobile applications. • It started delivery in Gurgaon, India in November 2014. • And then expanded to 17 to 18 cities by September 2015. THE FOUNDERS OF PEPPERTAP
- 4. LAYOUT OF THEAPPLICATION
- 5. PEPPERTAP REVENUE ANDPAT(PROFIT AFTER TAX) in INR Cr. FY 14-15 FY 15-16
- 6. • BigBasket’s (SupermarketGrocery Supplies Private Limited) revenue grew 2.5X in FY15 over the previous year, they did not report a profit. Losses for the period stood at INR 61 crores. • Peppertap collapsing and Grofers shuts its operations in several cities. Is Bigbasket profitable?
- 7. FUNDINGAND INCREASE INDEMAND • PepperTap raised US$ 51.2 million in funding from investors such as Innoven Capital, SnapDeal, Sequoia India, SAIF Partners, Ru-Net, Beenext, JAFCO Asia, and others. • The company had secured its series B round of funding of US$40 million in December 2015 • By October 2015, PepperTap was one of the top 3 grocery delivery services in India with an average of 20,000 orders delivered daily.
- 8. FUNDINGS OF TOPONLINE GROCERS
- 9. Rise of PEPPERTAP •They worked on “100% Inventory-less” model, wherein they bought the existing inventory in local stores online to their app. • They had a great start, operating in around 31 cities and they were processing on an average of 20,000 orders per day. • They became one of the largest player in India in online grocery delivery business within a year of operation. • They raised total of $51 million dollars from various investors like Sequoia Capital, Saif Partners, Snapdeal etc. within 15 months of their operation. JOURNEY OF PEPPERTAP
- 10. THE BEGINNING OFFALL • In September 2015, the company closed their operations in Agra and Meerut after a month of pilot run. PepperTap entered Tier III cities to test the ground and found it not profitable and had to quickly exit the market before losing much money. • In February 2016, PepperTap halted operations in 10 cities including metros like Mumbai, Chennai and Kolkata and it laid off around 400 employees as cost-cutting activity. • They were focusing only on cities like Delhi, Gurgaon, Noida, Hyderabad, Pune, Ghaziabad, Faridabad and Bangalore which accounted 70% of their revenues. Finally, in April 2016, PepperTap pulled its plug off from its cash burning grocery delivery business. COMPETITORS FATE • Most of the PepperTap’s competitor had no different fate, the startups like LocalBanya, Ola Café, Flipkart NearBy, Townrush, PayTm etc too have pulled their plug in grocery delivery business as they couldn’t survive. • Only startups which have survived and are doing good are Grofers and BigBasket. Unlike other players BigBasket follows inventory model and it raised $150million in March 2016 and they are processing around 35,000 orders per day.
- 11. What is thedifference between Grofers' and PepperTap's business models? Peppertap is more of logistic + delivery service using an e-Commerce platform whereas Grofers is an end to end solution provider. In some cases its working model is similar to Peppertap but in many other cases it works end to end. How Peppertap works ? You order fruit or vegetable, their delivery boy goes to the fruit and vegetable shop (tie ups with such shops) near you and select the fruits and vegetables and deliver to you. How Grofer works ? They have their own people who buy from farmers, vendor and deliver them to their warehouse where it is sorted, packed and dispatched at various small substations near you in the morning from where it is delivered to your doorstep.
- 12. REASONS FOR ITSFAILURE • It grew too fast to quickly:- In a race to pepper the country with PepperTap they bought too many stores to quickly. Because of which the integration of the application with the local stores was difficult. • Technology:- The customers were unable to see the entire selection of items from the store and essential items were missing from the catalogue. The company had to convince the smaller stores to adopt electronic inventory management and billing system. • Competition from the wandering push cart: Fresh veggies at drop dead prices v/s packed and sealed ones delivered few hours later: customers usually chose the former.
- 13. REASONS FOR ITSFAILURE • Unsustainable Discounts:- The company was spending a lot of time to devise clever sales and discounts. They had sold products in lesser prices than the physical stores which led to higher discounts. But this resulted in them losing cash on every order. E.g.Flat Rs.150 Off on Rs.250 Orders + Extra Rs.100 Referral Bonus to Referral • Inventory Management:- PepperTap maintained very less inventory as compared to BigBasket which had a huge inventory. Cash burnt in terms of the discounts given per order to consumers. Buffer capacity in logistics and operations team to meet 2 hour delivery time.
- 14. • Operational issuesat delivery boy level All products are not available at a single store, and this makes a delivery boy run around to find another store. Time and fuel get wasted in this process. This makes the cash burn higher. Cash handling by delivery boys is also a concern and most inventory-less apps are struggling to deal with it. Recruitment, training, and retention are also where app companies burn a lot of money. • The discount-hungry, disloyal user Indian users too have become smarter. In order to keep availing the 20 percent discount, people order groceries from 4-5 different mobile numbers they would have in the same household. Most e-retailers offer 20 percent discount only on first purchase, usually connected to a mobile number. The discount hungry Indian customers wane away as soon as the schemes stop.
- 16. Suggestions to PEPPERTAP 1.Clubbing of delivery orders to reduce per order delivery cost 2. Market dependency for small deliveries in nearby areas i.e. mixed delivery fleet of own and shops. 3. Daily, Weekly, Monthly order management system allowing consumers to fix the delivery schedule as per their need. 4. Targeted marketing to reach the in-need consumer base. For example targeting office personnel having hectic lifestyle, old age person needing alternative of going to market.(People who prefer time to money are the major consumer of hyper local business.) 5. Smarter recommendation of next purchase to consumers. For example – Recommendation of organic food in place of normal etc. 6. Loyalty discount for next time use of app. Say 10% discount on next purchase order. 7. Free gifts. Gifts plays a long term impact on consumer mind-set rather than Rs.30-40 discount. 8. Providing special membership(eg: Bachat Club Membership) to loyal customers.
- 17. CONCLUSION Indians arejugaad-friendly. In a market crowded with online grocery apps , people tend to download apps, get their first order at maximum discount by using coupons and then simply uninstall the app from the device. In each lane and bylane of any Indian city and suburb there is a grocery store (KIRANA STORE) selling the basic needs of bread, rice, pulses, milk and eggs who also delivery to your doorstep without any delivery charge. It is therefore very difficult for online grocery shopping to be a success in India. It will still take a lot of years for it to happen. PepperTap wanted to revolutionise grocery buying – freedom from queues, no parking hassles and no haggling. It was simple— create a marketplace for people to order food online and Singh’s foot soldiers would collect the goods and deliver it within two hours. The plan, however, did not work.