PepperTap failure

PepperTap

Large and fast grocery delivery service

Description

PepperTap provided online shopping platform that addressed customers' need to buy groceries from local markets by delivering the goods to their doorsteps. It targets buyers from different groups of cities, divided into three tiers. The service helps in solving the problems of long queues in the market, limited parking spaces and manipulative intermediaries. Grofers, their main competitor, focused only on big cities to reduce management costs. Another strong competitor of theirs is BigBasket which manages its own inventory and operates as a mega wholesaler, while PepperTap obtains their inventory from local suppliers.

Stats

Category
Food and Beverage
Country
India
Started
In 2014
Closed
By 2016
Number of Founders
Two
Name of Founders
Milind Sharma, Navneet Singh
Number of Employees
Between 1001 And 5000
Number of Funding Rounds
4
Total Funding Amount
$51.2M
Number of Investors
7
Precise Cause of Failure
Poor Product
Business Outcome
Shut Down

Cause of Failure

Among the reasons why the company shut down even after receiving big investment money from investors, was the deep-seated perception in customers' minds that online platforms should provide cheaper solutions to their needs. To accommodate such expectations, PepperTap offered discounts and sales which were disproportionate to their account strength. PT also failed to weigh the scalability of their project before its full-blast expansion, which caused problems related to technology. For example, certain segments of their products malfunctioned and could not be accessed by customers on the platform.

PepperTap entered the online grocery business without sufficient preparation. It failed to acknowledge the need for deep pockets, large assortment, competitive prices and inventory management.

While 2015 was a great year for startups, and PepperTap was able to find venture capitalists relatively easily, 2016 brought a different scenario. Startups all over the world faced a slowdown in VC activities, and PepperTap had to bow down to the situation. The costs that the company had to bear were high compared to the profit it made. Since they operated without their own inventory, they needed to pay for outsourcing of inventory management plus technology, operation, etc.

PT founders also pointed out that the fact the Indian market was still unprepared for this type of service factored in as a reason that caused them to suspend their operations. The delivery fee for home delivery was seen as too high, particularly in second and third tiers cities or areas where the presence of delivery boys (kirana), was common and proved to be a tough competition to the online platform strategy.

Grocery shopping is also a favorite leisure activity after work among Indians and is often seen as an activity that brings the family together, making it an additional cultural challenge to Internet grocery businesses in India.

Go on Reading

Other Startups

LuckyUnicorn t-Shirts
We've just launched 20 limited edition Failory t-shirts. Click here to buy one!

Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

PepperTap

Large and fast grocery delivery service

General Information
Category
Food and Beverage
Country
India
Started
In 2014
Business Failure
Business Outcome
Shut Down
Closed
By 2016
Cause of Failure
Poor Product
Founders & Employees
Number of Founders
Two
Name of Founders
Milind Sharma, Navneet Singh
Number of Employees
Between 1001 And 5000
Funding
Number of Funding Rounds
4
Total Funding Amount
$51.2M
Number of Investors
7
Description

PepperTap provided online shopping platform that addressed customers' need to buy groceries from local markets by delivering the goods to their doorsteps. It targets buyers from different groups of cities, divided into three tiers. The service helps in solving the problems of long queues in the market, limited parking spaces and manipulative intermediaries. Grofers, their main competitor, focused only on big cities to reduce management costs. Another strong competitor of theirs is BigBasket which manages its own inventory and operates as a mega wholesaler, while PepperTap obtains their inventory from local suppliers.

Cause of Failure

Among the reasons why the company shut down even after receiving big investment money from investors, was the deep-seated perception in customers' minds that online platforms should provide cheaper solutions to their needs. To accommodate such expectations, PepperTap offered discounts and sales which were disproportionate to their account strength. PT also failed to weigh the scalability of their project before its full-blast expansion, which caused problems related to technology. For example, certain segments of their products malfunctioned and could not be accessed by customers on the platform.

PepperTap entered the online grocery business without sufficient preparation. It failed to acknowledge the need for deep pockets, large assortment, competitive prices and inventory management.

While 2015 was a great year for startups, and PepperTap was able to find venture capitalists relatively easily, 2016 brought a different scenario. Startups all over the world faced a slowdown in VC activities, and PepperTap had to bow down to the situation. The costs that the company had to bear were high compared to the profit it made. Since they operated without their own inventory, they needed to pay for outsourcing of inventory management plus technology, operation, etc.

PT founders also pointed out that the fact the Indian market was still unprepared for this type of service factored in as a reason that caused them to suspend their operations. The delivery fee for home delivery was seen as too high, particularly in second and third tiers cities or areas where the presence of delivery boys (kirana), was common and proved to be a tough competition to the online platform strategy.

Grocery shopping is also a favorite leisure activity after work among Indians and is often seen as an activity that brings the family together, making it an additional cultural challenge to Internet grocery businesses in India.

Go on Reading

Wattage

Online platform that made creating hardware easy

Software and Hardware
Shut Down
$200K
No Market Need
Software and Hardware
Canada
In 2014
By 2015
Three
Between 51 And 100
Less Than 1M
No Market Need
Shut Down
Fuhu

Designer and seller of cloud-served softwares

Software and Hardware
Acquired
$66.2M
Mismanagement of Funds
Software and Hardware
United States
In 2006
By 2015
Three
Between 501 And 1000
More Than 50M
Mismanagement of Funds
Acquired
Delicious

Bookmarking website to save, organize and discover links

Productivity
Still Active
No Data
Acquisition Flu
Productivity
United States
In 2003
By 2017
One
Between 51 And 100
No Data
Acquisition Flu
Still Active
MySpace

Social network based on personal user pages

Social Media
Still Active
$37.8M
Multiple Reasons
Social Media
United States
In 2003
Active
Seven
Between 251 And 500
Between 10M 50M
Multiple Reasons
Still Active
Gowalla

Social Guide to world's cities

Social Media
Acquired
$10.4M
Competition
Social Media
United States
In 2007
By 2013
Two
Between 11 And 50
Between 10M 50M
Competition
Acquired
Selltag

Platform for people to sell and buy items

e-Commerce
Shut Down
€325K
Failure To Pivot
e-Commerce
Spain
In 2014
By 2015
Four
Between 11 And 50
Less Than 1M
Failure To Pivot
Shut Down