Mumbai-based Peel Works halts grocery distribution biz

Services and technology company Peel Works has put a pause on its distribution business. They have stopped distributing fast moving consumer foods (FMCG) products to Kirana stores for the past 10 months. The business has been put on hold to correct the faulty implementation of its model and conserve cash, Samir Ladak, co-founder and Head of Alliances of the company, told Entrackr.

While several sources pointed out that it has now gone for a complete shutdown, the Mumbai-based company has denied this. The company used to procure its products from wholesale distributors, but says it is now gearing up to supply by tying up directly with manufacturers and FMCG giants. However, its operations have halted for now, even as the company says it will resume them in a few months’ time.

Peel Works has pivoted from its core B2B model and will now be directly dealing with FMCG companies. The new model of working with the manufacturers directly will increase their margin by 2–3%, Ladak said. In their distribution business, Peel Works will now be dealing directly with their customers.

“We want to increase the sales that we do directly through brands. This way we get additional margins, and our cost structures are better,” Ladak said. The company said it signed up with a few big-name brands, but declined to name them. They are planning to restart their distribution business by the end of September this year, Ladak claimed.

The company raised its last funding tranche in April 2021 to the tune of $1.6 million. The twelve-year-old firm has raised $20 million from investors including Chiratae Ventures, Unilever Ventures, Indian Angel Network, BlackSoil, and HDFC Bank.

The halt of Peel Works’ operations is not surprising as several grocery-focused companies including PepperTap, LocalBanya, ZopNow and Townrush pulled the plug from their ops during the 2015-16 period. Figuring out unit economics has remained one of the major challenges for online marketplace or inventory-led plays in the grocery space. This could be seen from BigBasket, BlinkIt, Swiggy Instamart and Dunzo Daily which are soaked in heavy losses even after some being in the space for over a decade.