Hyperlocal delivery startup Opinio has temporarily shut down its operation in all cities, the company confirmed to YourStory over a phone call. However, it refused to divulge reasons for the shutdown. Sources tell YourStory that Opinio will pivot from its existing business model in the next few weeks.
“Opinio is pivoting from the current business model as it failed to figure out unit economics and on-board new investors,” says a source inside the company who doesn't wish to be named. According to the same source, the company has been struggling since early this year as existing investors including Delhivery declined to put more capital in it.
Founded by Mayank Kumar and Lokesh Jangid, Opinio is a tech-enabled hyperlocal logistics startup that helps small businesses (merchants) – restaurants, grocery stores, bakeries and laundry stores – fulfil their demand by offering delivery as a service.
Last year, Opinio amassed $7 million in its Series-A funding from logistics company Delhivery, Sands Capital, and Accel Partners. The shutdown poses serious questions on the viability of other business-centric, on-demand logistics businesses. Importantly, Opinio is the second business-centric funded company to halt operation after Zomato-backed Pickingo.
Pickingo was acquired by Shadowfax, which was backed Snapdeal’s founders. Prior to Series A, Opinio had managed to raise $1.3 million from Accel Partners and Tracxn Labs.
“Opinio has been in trouble for about six-eight months but it managed to survive because of Delhivery,” says a core team member of the Gurgaon-based company. According to the executive, Delhivery had outsourced a portion of its delivery volume to Opinio. “But volume was not enough to sustain independent operation of Opinio,” the source adds.
The shutdown also appears to have reflected a setback to Delhivery’s ambition to get into the business of local delivery. Delhivery had backed Opinio at a time when business-focused logistics startups were touted to be a big opportunity in the logistics space.
The Tiger Global-funded, e-commerce-focused logistics company had recently raised an internal round and was planning to stage IPO next year.
According to YS Research, last year, VCs made a mad rush to make investments in B2C as well as B2B logistics, with almost over $230 million invested in the overall on-demand logistics delivery space. But contrary to last year's euphoria, this year, investors frowned upon unit economics in the delivery business at large. In April 2016, on-demand, consumer-facing delivery startup Peppertap halted its operations, citing unviability of business.
With Opinio going out of the fray, the competition for business-focused local or hyperlocal logistics businesses largely shrinks to a handful of players, primarily Shadowfax and Quickli. Experts say that figuring out unit economics isn’t easy in local logistics business as it lacks volume and requires extensive manpower interventions, hence making it an asset-heavy model. Meanwhile, as of now, we have also not seen any massive two-digit round for any of the business-focused logistics startups.