On a regular Wednesday, you opened the app to order your daily veggies, produce for your lunch and bam, nothing. Everything was out of stock and there was no delivery, no refunds, no answers. That’s how thousands of loyal customers had found out that Otipy, which was once Uber of farm-fresh produce, had suddenly vanished.
This year, in the month of May, Otipy which was once a promising Agri tech, ceased operating suddenly and left approximately 300 employees and a lot of gig workers jobless. And what’s even more shocking is that the company had raised $44 million in funding and it had also reported significant revenue growth. So what went wrong, why did it shut down it’s operations?
The Rise of Otipy
The company was founded by Varun Khurana and Prashant Jain, as a subsidiary of Crofarm Agriproducts. The aim behind launching this startup? To revolutionize the fresh produce supply chain in India. The platform they provided directly connected farmers with consumers through a network of community resellers who were primarily women.
By leveraging AI for demand forecasting, the company Otipy promised delivery of farm-fresh produce within 12 hours of harvesting. Additionally, they also promised to reduce waste and ensured better prices for both farmers and consumers. The company had a B2B2C model and it saw its rapid adoption. What further fueled it’s adaption was that during the pandemic, consumers sought safer and fresher food options.
As reported by Yourstory, in the financial year 2023, Otipy had reported revenues of ₹96.43 crore which was a significant increase from ₹61.84 crore in the previous fiscal year. Furthermore, its innovative approach attracted a lot of important investors such as WestBridge Capital, SIG, and Omidyar Network India.
The 10-Minute Delivery Era That Left Otipy Behind
From what we know up until now, it’s safe to say Otipy had a great start. Things started to go downhill when it started to struggle to sustain its operations amid a changing market landscape. The quick commerce platforms such as Blinkit, Zepto and Instamart were at a rise, and with the promise of delivering everything under 10 mins, how could Otipy keep up? Otipy’s subscription-based model was reliant on planned purchases and it found it really hard to compete with the convenience offered by these new entrants.Â
Moreover, what compounded the issue further was a failed attempt to secure a crucial $10 million funding round. And reports suggest that the Hero family office, a potential lead investor, withdrew support at the last minute. Thereby leaving the company in a cash crunch. With no financial help there were delayed payments to employees and vendors, with some staff reporting unpaid salaries for over six weeks.
Lessons To be Learned
1. When Ambition Outruns Stability
There were various factors and activities that might have thinned out Otipy’s resources such as the over ambitious expansion plans, including deploying thousands of electric carts for offline sales. While we all know that innovation is important, what’s more crucial is having a stronger financial foundation.
2. Flexibility Wins in a Moving Market
Never stick to one idea, one thought. The market is dynamic. It has been changing and will continue changing, one needs to have a Plan B and Plan C, to stay ahead in the game and compete with competitors. The swift rise of quick commerce highlighted the importance of agility in business models.
3. Trust Dies in Silence
The abrupt shutdown and vanishing was so not right. The minimal communication to employees and customers, underscores the importance of transparency during crises. Truthful open dialogues can help manage expectations and maintain trust, even in challenging times. Afterall, employees had been loyal to them for the longest time.
4. Sustainable Growth Over Hypergrowth
Everyone celebrates and appreciates rapid growth but what’s also important is sustainability, because what’s the use of rapid growth if you have to shut down your business one day? Balancing growth aspirations with operational capabilities is essential for enduring success.
One needs to always remember that even if things do not go as they were initially planned, there’s always an alternative and there’s always a way forward. Failures, while painful, often carry valuable lessons for a stronger comeback. If you’re navigating failure or want to learn how others turned theirs into success, this read might offer the perspective you need.
