#Asia More troubles for India foodtech; PepperTap closes operations in 6 cities

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Five months ago the grocery delivery startup raised US$36 million and said it wanted to a presence in a total of 75 cities

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With yet another Indian foodtech startup navigating troubled waters, it is becoming increasingly difficult to project if the industry will find a bridge.

Yesterday, the hyperlocal grocery delivery service PepperTap confirmed it will pull out of 6 cities — including the major metro areas of Mumbai, Chennai and Kolkata, according to various India media reports.

Livemint reported the move will result in 400 delivery men losing their job.

Also Read: SoftBank-backed Grofers shuts operations in 9 cities due to poor uptake

CEO Navneet Singh released a statement to the media and cited India’s cooling investment atmosphere as justification for the move,

“Even though PepperTap has been able to establish itself as a leading hyperlocal grocery delivery service, given the short to mid-term investment climate outlook, we have decided to focus on depth rather than breadth. We are digging our heels in for the long term. We will focus on building a stellar customer experience by providing additional categories and services that differentiate us from our competition in cities where we continue to operate in.”

Peppertap is closing operations less than five months after it raised a US$36 million Series B led by Snapdeal in late-September 2015; followed by an additional US$4 million in December. The plan at that time was to expand company presence into 75 cities and employ a staff of 6,000 people.

The grocery delivery company works by tapping into local shops for inventory. The model is to both serve customers as a delivery service but also to bring smaller shops online.

The news is the latest in a string of mass-layoffs and operation closures in India’s foodtech ecosystem. In early January, Grofers (a company similar, albeit larger, than Peppertap) shut down operations in nine cities and a week later food discovery startup Zomato left four cities.

At the end of December, 2015, foodpanda laid off 330 employees saying, “we will re-launch when the time is right”.

While local foodtech startups are struggling with a cooling environment, Amazon decided now was the time to jump into the market. The American e-commerce giant entered the grocery delivery industry last week by launching a 2-hour delivery app in Bengaluru.

India is an exceptionally important market for Amazon as the company is projecting, in the next few years, the South Asian country will become its second largest market outside of the US.

Also Read: After Grofers, Zomato shuts food delivery services in 4 Indian cities

The start to 2016 has been tough on the Indian startup ecosystem and investors have been projecting a year of consolidation.

Peppertap is a subsidiary company of Nuvo Logistics Pvt. Ltd.

 

 

 

The post More troubles for India foodtech; PepperTap closes operations in 6 cities appeared first on e27.

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