From Boom to Bust: The PepperTap Failure Case Study
- Last Updated November 11, 2023
Suraj Shrivastava
Chief Link Building Strategist
Chief Link Building Strategist
PepperTap – The online grocery delivery service business that started in 2014, was founded by Navneet Singh and Milind Sharma. Its headquarters were in Gurugram, Haryana. The company provided a user-friendly mobile app to allow its targeted audience to browse and order products conveniently.
PepperTap was one of the first online grocery delivery services to start in India. This gave it a number of first-mover advantages, like:
PepperTap was one of the few online grocery delivery services that many people were aware of. This helped the company to head start in terms of brand awareness and customer loyalty.
PepperTap was able to collect data based on consumers’ preferences and behaviors since day 1 of its operations. This helped the company to get valuable insights into what consumers what and how they can serve it.
PepperTap was able to bring its service to market quickly before others. This gave PepperTap a first-mover advantage in terms of market share and customer mindshare.
The two founders came up with the idea for PepperTap when they realized that there was a huge need for an online grocery delivery service in India as the Indian grocery market is huge but it is still largely offline and less convenient.
PepperTap’s aim was to simplify grocery shopping and make it more convenient and efficient for Indian consumers. The company’s name was inspired by the Indian spice “pepper,” which is well known for its freshness and heat.
Navneet Singh was the co-founder and CEO of PepperTap. He was a graduate of the Indian Institute of Management Ahmedabad and has over 10 years of experience in the field of technology industry. Before founding PepperTap, Navneet worked as a management consultant at McKinsey & Company.
Milind Sharma was the co-founder and CTO of PepperTap. He also graduated from the Indian Institute of Technology Delhi and has over 8 years of experience in the technology industry. Before founding PepperTap, Milind worked as a product manager at Google.
PepperTap’s business model was based on a two-sided marketplace. On one side marketplace were consumers who wanted to buy groceries online whereas on the other side marketplace were grocery stores that supplied the products.
PepperTap acted as an intermediary between the customers and the grocery stores. Consumers used to place orders on PepperTap’s website or mobile app and then PepperTap would aggregate the orders and send them to the desired grocery stores. The grocery stores would then fulfill the orders and deliver the products to the consumer.
PepperTap offered hyperlocal delivery, which means it delivered groceries to customers within a few hours of placing an order. This was a key differentiator from its competitors, who typically offered next-day delivery.
PepperTap offered zero-cost delivery on orders over a certain amount. This was another key differentiator that helped PepperTap attract customers.
PepperTap offered heavy discounting on a wide range of groceries. This helped to keep prices competitive and attract new customers.
PepperTap did not own any inventory. Instead, it partnered with local grocery stores to fulfill orders. This helped to reduce the company’s costs and allowed it to offer lower prices to customers.
PepperTap charged a commission on each order that it facilitated. The commission rate varied depending on the value of the order and the grocery store.
PepperTap sold advertising space on its website and mobile app. This was a relatively small source of revenue for the company, but it helped to offset some of the costs of operations.
PepperTap offered a subscription service that gave customers free delivery on orders over a certain amount. This was a relatively new revenue stream for the company, but it had the potential to grow in the future.
PepperTap’s mobile app was quite user-friendly and easy to use. The app allowed customers to have a wide selection of products, place orders, and track the status of their deliveries accordingly.
PepperTap offered same-day delivery on most orders. This was their biggest strength and as one at that time was providing the same.
PepperTap partnered with various local grocery stores, which gave customers a variety of products to choose from.
PepperTap offered heavy discounting on various products. This helped to keep prices competitive and attract new customers.
PepperTap company raised over $50 million in funding from investors such as Sequoia Capital, Tiger Global Management, and SoftBank. This funding helped the company to grow its business and hire more employees.
PepperTap quickly grew its customer base after launching in 2014. The company had over 1 million registered users at the time of its closure in 2016.
PepperTap offered a wide selection of products from local grocery stores to its customers. This gave customers a variety of products to choose from and made it convenient for them to order groceries online.
PepperTap’s customers seemed to be loving the company’s service. The company received positive reviews from customers on social media and review websites.
PepperTap’s business model was quite expensive to operate and the company had to spend a lot of money on marketing and customer acquisition.
PepperTap company faced tough competition from larger rivals such as Grofers and BigBasket. These companies had more resources and a larger network of customers and delivery partners.
The online grocery delivery market was growing rapidly, which hampers PepperTap’s resources. The company was not able to scale its operations quickly enough to meet the demand required.
PepperTap spent heavily on customer acquisition, but it was not able to acquire enough customers to make a profit.
PepperTap had problems with its delivery service. Customers often complained about late deliveries, incorrect orders, and missing items.
PepperTap’s technology was not up to the mark. The company’s website and app were often buggy and difficult to use.
PepperTap’s management team was inexperienced and made a number of strategic mistakes. For example, the company expanded too quickly into new markets without having the resources to support its growth.
PepperTap grew too quickly and was unable to manage its costs or scale its operations effectively. All new startups must learn to grow slowly and steadily.
PepperTap had problems with its delivery service. As consumers are the first priority one must focus fully on providing the best services to consumers.
PepperTap’s technology was not up to the mark. The company’s website and app were often buggy and difficult to use. Companies in this space need to have a strong technology in place to develop and maintain reliable and user-friendly technology solutions.
You must prepare for tough competition from larger rivals such as Grofers and BigBasket. These companies have more resources and a larger network of customers and delivery partners. Companies in this space need to be aware of the competition and develop strategies to compete effectively.
PepperTap’s business model was expensive to operate. New entrepreneurs must learn to manage costs effectively to ensure that they are profitable.
From PepperTap’s failure, new startups must take notes and understand the need for a proper slow plan, you should not be in a hurry to do everything at a time. You’re on a new journey, enjoy it and learn from it. Do your full research and make your strength your power to fight back against competitors.
Suraj Shrivastava at ForgeFusion shares simple, effective ways to grow your business using SEO, content marketing, and AI, learned from helping over 50 companies. When he's not working, he loves teaching others or watching documentaries.
