Grofers, the Indian on-demand delivery service startup backed by top investors, confirmed today that it has stopped operating in nine cities as first reported in Inc42.
The decision to pull out of Bhopal, Bhubaneswar, Coimbatore, Kochi, Ludhiana, Mysuru, Nashik, Rajkot, and Visakhapatnam, all major cities in their respective states, “was just a regular decision to not focus on areas where we were not seeing a significant number of transactions happening,” Grofers co-founder Albinder Dhindsa told TechCrunch.
He added that the news was not related to the departure of Varun Khurana last week after serving as Grofer’s chief technology officer for less than a year. Khurana joined Grofers after it acquired his startup, grocery delivery app My Green Box.
“We have shut down cities and categories in the past as well and will continue to do it if it makes sense for the business,” Dhindsa said. Grofers still operates in 17 cities throughout India.
According to Crunchbase, Grofers has raised about $165.5 million so far from investors including SoftBank, Sequoia Capital, and Tiger Global Management.
While testing new markets is routine for companies focused on rapid expansion, Grofers is being watched closely because it is one of the biggest hyperlocal delivery startups in India, so its decisions may give clues about future developments in the rest of the industry.
Grofers performs last-mile deliveries of food and products stocked in neighborhood stores. Its competitors include PepperTap, which is also backed by Sequoia as well as Snapdeal, one of India’s largest e-commerce companies; companies that focus exclusively on grocery deliveries, like ZopNow and BigBasket; and on-demand logistic providers Opinio, Zopper, and Shadowfax.
Hyperlocal delivery startups received a flurry of venture capital funding last year, but there are signs that the industry is headed toward consolidation. For example, BigBasket, one of the oldest online grocery stores in India, bought Delyver in June so it could start offering faster deliveries to compete with hyperlocal startups. PepperTap acquired Jiffstore, a smaller rival, last month, and Shadowfax scooped up Pickingo in November to build its logistics network.