Online grocery startup Loyalbanya halts operation temporarily

Citing upgradation of its back end, the online grocery startup Localbanya has halted operation for a while.
Citing urgradation of its back end, the online grocery startup Localbanya has halted operation for a while. "We are temporarily suspending services due to maintenance and upgrade purposes. No orders will be processed this time." the company said on its website. The company rejected speculation that it was strapped for cash and maintained that staff attrition was not unique to it.
"Our current team is well structured and the organisation continues to attract talent by virtue of the strong brand that we have built," said founder Karan Mehrotra. However, two suppliers of Localbanya said they had been told that there was a shortage of funds.
"The company is also trying to change the model of sourcing merchandise from large retailers or cash-and-carry players to consumer goods companies directly," said another supplier.
Founders Mehrotra, Rashi Choudhary and Amit Naik have been seeking to raise $15-20 million for the past few months and had plans to raise another $35-40 million by the end of this fiscal.
Industry executives said several Localbanya employees are looking for jobs with salaries not having been paid for the past two months. Nayan Choudhury is speculated to have quit as Vice President, Trading, Commercial and Operations. This could not be independently verified.
"Localbanya has been faltering on deliveries in the past few weeks due to paucity of funds. The company is trying to revive with fresh funds," said an executive. The company's Facebook page had several consumer complaints posted recently about orders not delivered.
Given the low margins in food and grocery retailing, online companies need a constant flow of funds. "Logistics and consumer promotion alone would account for 20 per cent of the total cost for the online grocers. With huge competition in online grocery retailing space, the companies should now look at how to make the business sustainable and generate profit," an industry official said. 
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