India's most funded hyperlocal startup Grofers shuts shop in 9 cities

Hyperlocal grocery and fresh food delivery startup Grofers India Pvt Ltd, which ran a massive expansion drive four months ago, has shut down its operations in nine cities.

The cities where it has stopped services are Bhubaneswar, Ludhiana, Bhopal, Kochi, Mysore, Nashik, Rajkot, Coimbatore and Visakhapatnam.

The Gurgaon-based startup now operates in 17 cities -- Agra, Ahmedabad, Bengaluru, Chennai, Chandigarh, Hyderabad, Indore, Jaipur, Kanpur, Kolkata, Lucknow, Mumbai, NCR, Nagpur, Pune, Surat and Vadodara, according to its website.

Grofers reportedly withdrew from the nine cities as it didn't see much uptake even after running massive marketing campaigns.

A company spokesperson told Mint that all the employees in these cities are being relocated to other centres. The company's founder Albinder Dhindsa did not respond to Techcircle.in calls to confirm the development.

In October, Grofers had halted operations in Delhi and parts of the national capital region to resolve last-mile delivery issues.

The news of closing operations in nine cities came days after Grofers chief technology officer Varun Khurana resigned.

Founded by Saurabh Kumar and Albinder Dhindsa in 2013, Grofers allows users to order products ranging from grocery to pet supplies and electronic products online. Grofers, which operates on a marketplace model, claims it fulfills about 30,000 orders daily.

Grofers, in November, raised $120 million (Rs 780 crore) in funding led by Japanese internet conglomerate SoftBank Corp. Existing investors Apoletto Managers, Tiger Global Management and Sequoia Capital also participated in this round of funding. Apoletto is the personal investment vehicle of DST Global's Yuri Milner. In August, it raised $35 million (Rs 218 crore) from Tiger Global Management and Sequoia Capital.

The online grocery delivery sector had its share of highs and lows last year. Mumbai-based Localbanya, a three-year-old online supermarket backed by Shrem Strategies and Bennett, Coleman & Co Ltd's Springboard Fund, stopped taking orders in October 2015. Localbanya asked 40 per cent of its employees to leave as it prepared to pivot from being an inventory-led, warehousing-centric model to an online marketplace for groceries. The company's website still reads: "We are under renovation. We will be back shortly."

In December, Delhi-based online grocery store Meragrocer.com got acquired by RP-Sanjiv Goenka Group's privately held multi-format retailer Spencer's Retail Ltd for an undisclosed sum.

EkStop, another Mumbai-based e-grocery, also got snapped up by Godrej Nature's Basket.

Grofers also competes with the likes of BigBasket and VC-backed startup PepperTap.