Bengaluru-based last-mile logistics company Opinio has suspended operations in several segments until further notice, and is likely to get out of the hyperlocal delivery sector altogether.
In a telephonic conversation with FactorDaily, Mayank Kumar, co-founder and CEO of Opinio and an IIT Kanpur alumnus who founded the company in 2015 with Lokesh Jangid, admitted that they were “suspending operations in a few segments, including deliveries for food startups,” but said this was merely a regrouping of sorts.
“We are just pivoting into a product company, and have paused certain segments,” said Kumar. He said he could not, at this point, elaborate on what he meant by a “product company”.
“This is not a tech heavy business. If you don’t get your ops right, you can do whatever you want but you won’t get it right”
— Pratyush Prasanna, founder of MagicX
Opinio shared an email with several of its partner merchants to the effect that it may be suspending operations for some time. The email, sent late last night (October 25), says: “Due to unavoidable reasons, we are suspending our operations until further notice. We have shutdown (sic) all API integrations and support. Inconvenience caused is deeply regretted.”
Opinio, which raised $7 million in October 2015 in Series A funding from Delhivery, Sands Capital, and Accel Partners, claims it is present in six cities: Bengaluru, New Delhi/NCR, Mumbai, Hyderabad, Pune and Chennai, though it could not be ascertained if it is indeed operational in all these cities and to what extent. While Opinio has always pegged itself as a “B2B hyperlocal logistics” company, it used to offer peer-to-peer delivery as well. That service was stopped a few months ago and the company has been strictly B2B for some time.
Now, it appears the company is moving out of hyperlocal logistics, which is a notoriously difficult segment to crack — mainly because there are too many moving parts, from unavailability of delivery personnel and high attrition rates, to reliability issues, terrible traffic conditions that make it impossible to cover costs (let alone make profits), and unwillingness on the part of the market to pay more for convenience.
Pratyush Prasanna, founder of MagicTiger (now called MagicX), said deep discounting — not just to individual customers but to merchants using Opinio as a third-party service provider — may have affected its bottomline. “It is clearly a B2B business and offers pure utility for businesses, so there is no reason to offer discounts. You are basically funding the other person’s business in that case. In business, there is no allegiance,” said Prasanna.
Many logistics companies have also “overhyped the use of technology,” said Prasanna, especially around drone delivery and black box algorithms that could predict customer needs. “This is not a tech heavy business. If you don’t get your ops right, you can do whatever you want but you won’t get it right,” he said.
It is well known that most logistics companies have high burn rates because of these challenging conditions and the necessity of covering costs out of pocket. In 2016 alone, several startups — both funded and unfunded — in the logistics and hyperlocal delivery space have shut down. These include PepperTap, MovinCart, Zippon, Medist, Instafresh, Cartmeal, Flashdoor, VeggyKart, Doormint and Local Banya.
Even biggies Flipkart and Ola shut down their hyperlocal delivery verticals Flipkart Nearby and Ola Cafe and Ola Store after a few months of operations.
Hyperlocal concierge app Dunzo, which we wrote about here, despite generating impressive goodwill and word-of-mouth popularity, has restricted its operations to a few areas in Bengaluru, namely Indiranagar, Koramangala, the Central Business District (MG Road and thereabouts), and Frazer Town. It recently stopped servicing customers in other areas such as south Bengaluru. According to co-founder Kabeer Biswas, this is because demand in its core areas has grown. It remains to be seen if it can expand out of its comfort zone.
Meanwhile, it’s an interesting time to watch the once-exciting hyperlocal delivery sector, which has seen many unexpected closures in the past few months.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.