<p>PeperTap’s decision to stop consumer business and focus solely on logistics reinforces investors’ wake up call to end blind funding for Indian eCommerce startups.<br /><br /></p>.<p>Rather than helping them in the cash burning process, investors want these companies to prioritise their business models and improve their return on investment.<br /><br />Hyperlocal delivery startup PepperTap, which recently raised $50 million from Sequoia Capital, reportedly decided to stop its grocery delivery operations to focus on its reverse logistics business.<br /><br />Nuvo Logistics, which owns PepperTap, is a reverse logistics company and has eCommerce companies as its clients. Besides winding up operations in Agra and Meerut last year, PepperTap had shut operations in six other cities Ahmedabad, Chandigarh, Mumbai, Kolkata, Chennai and Jaipur.<br /><br />It also failed to capitalise on the acquisition of JiffStore, a Bengaluru-based hyperlocal grocery delivery startup.<br /><br />According to Mohandas Pai, the co-founder of Aarin Capital, investors are putting money in Indian eCommerce startups realising its future growth. “There will be some initial cash burn in the sector so that customers can get hooked on to the business model by these eCommerce companies. Investors will think that once customers are hooked on and used to the convenience, the business model will generate money,” he said.<br /><br />When asked about the sudden change in the business model of companies, especially PepperTap, Pai said once investors realise the business model is not viable they do not want to further loose their money. “So, these eCommerce firms will have to cut down cost and show their performance to investors. For that they will have to even change the business model. That is what happened with PepperTap also,” he said.<br /><br />Nagaraja Prakasam, Mentor in Residence at N S Raghavan Centre for Entrepreneurial Learning (NSRCEL) IIM-B and Co-Founder of IAN impact, said these high growth companies’ business models are not sustainable.<br /><br />“They try to buy customers by selling products through marketing campaigns. They can do it for a short period. Softbank, along with other investors are dumping money based on the expectations that India would also produce more eCommerce companies like that of China’s Alibaba. So the digital space is attracting more. Here we should understand our per capita income is only $2200,” said Prakasam.<br /><br />SoftBank President and COO Nikesh Arora recently exhorted Indian eCommerce players to stop ‘cash burn’ and focus on customers instead.</p>
<p>PeperTap’s decision to stop consumer business and focus solely on logistics reinforces investors’ wake up call to end blind funding for Indian eCommerce startups.<br /><br /></p>.<p>Rather than helping them in the cash burning process, investors want these companies to prioritise their business models and improve their return on investment.<br /><br />Hyperlocal delivery startup PepperTap, which recently raised $50 million from Sequoia Capital, reportedly decided to stop its grocery delivery operations to focus on its reverse logistics business.<br /><br />Nuvo Logistics, which owns PepperTap, is a reverse logistics company and has eCommerce companies as its clients. Besides winding up operations in Agra and Meerut last year, PepperTap had shut operations in six other cities Ahmedabad, Chandigarh, Mumbai, Kolkata, Chennai and Jaipur.<br /><br />It also failed to capitalise on the acquisition of JiffStore, a Bengaluru-based hyperlocal grocery delivery startup.<br /><br />According to Mohandas Pai, the co-founder of Aarin Capital, investors are putting money in Indian eCommerce startups realising its future growth. “There will be some initial cash burn in the sector so that customers can get hooked on to the business model by these eCommerce companies. Investors will think that once customers are hooked on and used to the convenience, the business model will generate money,” he said.<br /><br />When asked about the sudden change in the business model of companies, especially PepperTap, Pai said once investors realise the business model is not viable they do not want to further loose their money. “So, these eCommerce firms will have to cut down cost and show their performance to investors. For that they will have to even change the business model. That is what happened with PepperTap also,” he said.<br /><br />Nagaraja Prakasam, Mentor in Residence at N S Raghavan Centre for Entrepreneurial Learning (NSRCEL) IIM-B and Co-Founder of IAN impact, said these high growth companies’ business models are not sustainable.<br /><br />“They try to buy customers by selling products through marketing campaigns. They can do it for a short period. Softbank, along with other investors are dumping money based on the expectations that India would also produce more eCommerce companies like that of China’s Alibaba. So the digital space is attracting more. Here we should understand our per capita income is only $2200,” said Prakasam.<br /><br />SoftBank President and COO Nikesh Arora recently exhorted Indian eCommerce players to stop ‘cash burn’ and focus on customers instead.</p>
