Grofers shuts down operations in 9 cities

Grofers ran pilot projects in 15 new cities in September. Photo: Ramesh Pathania/Mint

Grofers ran pilot projects in 15 new cities in September. Photo: Ramesh Pathania/Mint

Mumbai: Grofers India Pvt. Ltd has shut delivery operations in nine cities in the past 15 days because of low acceptance of its services in these areas, company co-founder Albinder Dhindsa said.

Grofers ran pilot projects in 15 new cities in September. The nine cities where it has decided to stop services include Ludhiana, Bhopal, Kochi, Coimbatore and Visakhapatnam.

“We ran a series of marketing campaigns including television ads in these cities to test the markets and see if the volume picks up,” said Dhindsa. Operations in cities that did not react to the marketing effort were shut. The company now operates in eight cities.

“The smaller cities are not ready for hyperlocal business yet, once they are, we will reconsider our strategy,” he added.

Grofers had a team of 20-30 people employed in these cities. These employees are being relocated, the company said.

In November, Grofers raised $120 million in funding from Japan’s SoftBank Corp., Russian entrepreneur and venture capitalist Yuri Milner and existing investors Tiger Global and Sequoia Capital.

Other hyperlocal companies like Shadowfax Technologies Pvt. Ltd and Peppertap also said that their current focus is on consolidating their businesses rather than expansion. Gurgaon-based Nuvo Logistics Pvt. Ltd, which operates grocery delivery brand Peppertap, raised $36 million in September in a round led by e-tailer Snapdeal (Jasper Infotech Pvt. Ltd). Peppertap had earlier announced that it will look to grow to 75 cities by March.

“Our focus is to ensure that processes, systems and operations in the current 17 cities are fully efficient. For the next few months we are not looking to grow to any new city,” said Navneet Singh, co-founder of the firm. Singh said the company has put its expansion plans on hold for a while as its current focus is to enhance efficiencies within its existing operations.

Shadowfax has restricted operations to three cities—Mumbai, Delhi and Bengaluru. “We will be functional in these three cities, generate cash flows and operational efficiency. There are no plans to expand to new cities,” said Abhishek Bansal, co-founder at the company. The firm has 75 employees and is not looking to hire any more except at senior management positions.

“We have most of our hiring done, particularly those that require heavy manpower during May and June. We are more focused on stabilising our businesses. We are now concentrating on expanding our categories. We want to achieve few of our internal targets before we think of increasing our capacities. This would take about two to three months,” said Dhindsa over the phone on 24 November.