Rise and Fall of Peppertap

This PPT details the funding received by Peppertap at various levels. It also tells about the PAT in 2 successive years. I have listed the reasons for its failure. Detailed description on the inventory model adopted by the Peppertap and why it did not work out for the company.

1. by: MAYANK GUPTA

2. INTRODUCTION Launched in November 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 was founded 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 Gurg a on, India in November 2014. And then expanded to 17 to 18 cities by September 2015. T HE F O U N DE RS OF PEPPERTAP

4. LAYOUT OF THE APPLICATION

5. PEPPERTAP REVENUE AND PAT(PROFIT AFTER TAX) in INR Cr. FY 14-15 FY 15-16

6. BigBasket’s (Supermarket Grocery 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. FUNDI N G AND INCREASE IN DEMAND • Pe p pe r T ap ra i sed US$ 51.2 m i l l i on in funding fro m i n ve s t o rs su c h a s In n ov e n Cap i t a l, Sna p De a l, S e qu o ia In d i a , SAIF Pa r t n e r s, R u - Net, Beenext, JAF C O Asia, and oth e r s . • The co m pa n y had se c ur e d i t s se r i e s B ro u nd of funding of US$40 m i l l i on in De c e m ber 2015 • By Oc t ob e r 20 1 5, Pe p pe r T ap w as one of the t o p 3 g r oc e ry de l i v e r y se r v i c e s in In d ia wi t h an av e r a ge of 20, 00 o rd e rs de l i v e r ed da i l y .

8. FUNDINGS OF TOP ONLINE 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 OF FALL 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 the difference 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. REASO N S F OR ITS F AILURE • It g r ew to o fa s t to qui c k l y :- In a race to pepper the country wi t h Pe p pe r T ap they bo u ght t o o m any st o r e s to qu i ck l y . Bec a use of which the i n t e gr a t i on of t h e ap p l i c a t i on wi t h t h e lo c al sto r es was di f f i c ul t . • T e c hnol o gy : - The cus t o m ers were unab l e to see t he ent i re se l e c tion of i t e m s from t h e st o re and e s se n t i al i t e m s we r e m is s i n g from t h e c a t a l o gu e . The c o m pa n y h a d to c o nv i nce t h e s m a l l e r sto r es to ado p t e l e c t r onic inv e nto r y m an a ge m ent and b i l l i n g sys t e m . 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. REASO N S F OR ITS F AILURE Unsus t a i nable Dis c oun t s : - The co m pany was sp e nding a lot of t i m e to de v ise c l ev e r sa l es and d i sc o un t s. They had s old pr o du c ts in l e ss e r pr i c e s t h an the phys i c a l st o r e s whi c h l e d to hig h er dis c oun t s. But th i s r e sul t ed in th e m los i ng c a sh on ev e ry ord e r . E.g.Flat Rs.150 Off on Rs.250 Orders + Extra Rs.100 Referral Bonus to Referral Inv e nt o ry M a nag em en t : - Peppe r T ap m ain t ain e d ve r y le s s i n ve n t o ry as co m pa r ed to BigB a sk e t whi c h h a d a h uge inv e nto r y . 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 issues at 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.

15. Suggestions to PEPPERTAP Clubbing of delivery orders to reduce per order delivery cost Market dependency for small deliveries in nearby areas i.e. mixed delivery fleet of own and shops. Daily , Weekly, Monthly order management system allowing consumers to fix the delivery schedule as per their need. 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 .) Smarter recommendation of next purchase to consumers. For example – Recommendation of organic food in place of normal etc . Loyalty discount for next time use of app. Say 10% discount on next purchase order. Free gifts. Gifts plays a long term impact on consumer mind-set rather than Rs.30-40 discount. Providing special membership( eg : Bachat Club Membership ) to loyal customers.

16. CONCLUSION In d i a ns a r e juga ad- friend l y . In a m ar k et crowded with onl i ne gr o c e ry ap p s , people tend to download apps, g e t the i r first or d er at m ax i m um d i sc o unt by u si n g co u po n s a nd t hen si m p l y uni n st a ll the app from the dev i c e . In e a ch l a ne and by l ane of any I n d i an c i ty and su b urb t h e r e is a g ro c e r y st o re (KIRANA STORE) se l l i ng t h e ba s ic ne e ds of br e ad, r i c e , pu l se s , m i l k a nd eg g s who a l so de l i v e r y to yo u r d oo r st e p wi t ho u t any de l iv e ry ch a r ge. It is the r efore ve r y d i f ficu l t for on l i n e gr o c e ry sh o pp i ng to be a su c c e ss in In d i a . It wi l l st i ll t a ke a l ot of ye a rs for it to h a pp e n . 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.