Grocery delivery app Grofers has closed its operations in as many as nine cities after assessing that customers in these cities are not ready yet to take up their services.
The firm had launched an aggressive marketing television campaign in November last year to attract more users to its site but failed to generate enough demand out of it.
"We ran a series of marketing campaigns including television ads in these cities to test the markets and see if the volume picks up," co-founder Albinder Dhindsa told Mint.
Grofers has reportedly stopped its services in Bhopal, Bhubaneswar, Coimbatore, Kochi, Ludhiana, Mysuru, Nashik, Rajkot and Visakhapatnam. The demand in these cities was not enough for Grofers to continue with the advertising campaign.
"This is not the first time the company had to end operations in some cities and this might not be the last time either," a source told Business Standard.
In its last round of funding in November last year, the Gurgaon-based firm had raised $120 million from investors led by Japan's Softbank. Tiger Global and Sequoia Capital were also among the investors in that round.
Currently, Grofers operates in Mumbai, Delhi-NCR, Bengaluru, Pune and a few other cities. The company competes with BigBasket in the grocery delivery space.
"The smaller cities are not ready for hyperlocal business yet, once they are, we will reconsider our strategy," Dhindsa added.
Employees who are affected by shut down of operations in the nine cities are being relocated to other cities, the company said. Grofers had employed 20-30 people in those cities.
Other players in the space like Shadowfax Technologies Pvt. Ltd and Peppertap are also looking to consolidate their businesses.
"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 Peppertap.
Similarly, Shadowfax's operations have been confined to three cities currently.
"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 of Shadowfax.
