Bengaluru: Online supermarket Localbanya.com has temporarily suspended operations as the company gears for a technology and services upgradation.

“Your banya is upgrading his technology and services. We will be back shortly with more exciting features and a far better delivery experience. We can’t wait for you to experience the new and improved Localbanya," the company has said in a statement, which has also been posted on its website.

Links Retail India Pvt. Ltd, which runs the Mumbai-based Localbanya brand, was co-founded by Karan Mehrotra, Rashi Choudhary and Amit Naik. The company is likely to downsize its workforce as well, according to a source. But this information could not be verified by the company spokesperson. Localbanya has been in the market to raise around $15-20 million for the last few months, according to a report in the Financial Express.

Companies have not yet been able to crack this space despite attracting significant investments in the recent past. Food tech company Dazo decided to close down operations barely a year since it first started, while SpoonJoy announced it has suspended operations in Delhi and parts of Bengaluru.

Hyperlocal businesses and food tech companies operate on thin margins and struggle to compete in a space that is increasingly getting crowded in recent times.

The hyperlocal services model has also thrown up challenges as companies have not been able to get local “mom and pop" or kirana stores on board due to existing gaps in technology and integration. The increasing competition in the space has been forcing grocery delivery companies to burn through investor money in acquiring new customers and market share.

According to start-up tracker Tracxn, nearly 25 grocery delivery companies in India have cumulatively raised over $160 million in the last 10 months.

SuperMarket Grocery Supplies Pvt. Ltd-run BigBasket.com raised 325 crore in August 2015, taking the total funds it has raised to over 750 crore in the last two years. Locodel Solutions Pvt. Ltd-run Grofers, a delivery start-up, raised $35 million in August this year. PepperTap raised $36 million from e-commerce firm Snapdeal. Indians spend around $370 billion a year on groceries, according to Technopak, a retail advisory firm.

Paytm, an electronics payments company, is also set to enter the hyperlocal space within the next few days, Mint reported on 8 October. The hyperlocal service will be part of its wallet offering.

Localbanya had raised an undisclosed sum in March this year from Shrem Strategies. The company offered 14,000 products across 20 categories, including fruits and vegetables, personal care, kitchenware and even stationery. Localbanya has operations in Pune, Navi Mumbai, Hyderabad and the National Capital Region.

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