Hyperlocal e-grocery race in India: PepperTap bags $10M two days after ZopNow’s $10M round

2015 appears to be the year when grocery delivery makes a big shift online in Indian cities. Cool malls are still popular, but mostly on weekends. Busy urban professionals love the convenience of ordering everyday things online, including grocery. Even six months ago, you hesitated to order perishables online. But with hyperlocal grocery delivery services coming up, what you get now is the same as what you can pick up at the supermarket or local retailer.

Gurgaon-based PepperTap is one such hyperlocal service that has made rapid strides since its launch in November. Consumers can tap out their orders on their smartphones and expect delivery within two hours. Staples, dairy products, fresh fruits and vegetables, as well as other food and household items are among the 15,000 SKUs (stock keeping units) currently available through the PepperTap mobile app.

And today it raised series A funding of US$10 million from SAIF Partners and Sequoia Capital to expand to 10 cities by year-end. “Our sole focus is to build the best grocery and fresh product-buying experience for our customers. This investment will help us iron out any chinks in our armor and take our business from a single-city operation to a pan-India scale,” says Navneet Singh, co-founder of PepperTap.

Challenges of scaling up

Before launching PepperTap, Navneet Singh started a logistics company called NuvoEx to handle deliveries for large ecommerce sites. Then he decided to focus on grocery with PepperTap, charging retailers a commission for the delivery, like the US-based Instacart.

Navneet Singh tells Tech in Asia that the NuvoEx experience gives PepperTap an edge over its rivals when it comes to scaling up rapidly:

Given that we have already scaled up NuvoEx from a 20-person, single-city team to a 1,000 person-strong, 15-city operation within a year, we are fairly confident that scaling PepperTap team to 10 cities is not an impossible task for us.

Poor quality of systems and data in the target retail stores, regulated MRP (maximum retail price) which limits margins, and technophobic delivery staff are among the challenges PepperTap and other such services face in India. But Navneet Singh points out that he has already tackled these while scaling up NuvoEx.

And before starting NuvoEx, he was the vice president for strategy at logistics startup Delhivery.

PepperTap has been on a rapid growth path from the word go. The mobile-first startup raised an undisclosed amount in seed funding less than two months ago from Sequoia Capital. ““We agreed to invest in PepperTap even before the name was finalized, and before the first engineer was hired,” says Shailendra Singh, managing director of Sequoia Capital India Advisors, who felt they had “great chemistry” with the PepperTap founder.

SAIF Partners has now come in for the series A round because they feel the time is ripe for scaling up. “Grocery in India is a huge market and grocery shopping on mobile is already seeing strong adoption. We believe that PepperTap’s hyperlocal marketplace approach is the most efficient way to cater to this market, and can scale very rapidly,” says Ravi Adusumalli, managing director of SAIF Partners.