Zomato, the online food delivery platform, has made a big business decision with their operations in India, deciding to stop its grocery delivery service from September 17.
In an email to its grocery partners, Zomato said: “At Zomato, we believe in delivering best in class services to our customers and largest growth opportunities to our merchant partners. We don’t believe that the current model is the best way to deliver these to our customers and merchant partners. Hence, we intend to stop our pilot grocery delivery service effective 17 September, 2021.”
The exit comes mainly on account of gaps in order fulfilment leading to poor customer experience. It is the second time the company is exiting from the segment since last year.
Zomato had forayed into the grocery delivery service in July through a marketplace model where it enabled its customers to shop from their neighbourhood stores. Its rivals such as Swiggy, Dunzo, however, have a different model, where they set up dedicated dark stores to service grocery orders within 15-30 minutes.
Grofers, in which Zomato has a 10% stake, also promises grocery delivery in 10 minutes. The company said it believes its investment in Grofers will generate better outcomes for its shareholders than the in-house grocery efforts. Zomato has invested USD 100 million for acquiring the stake.
While the express delivery model, promising order fulfilment in 15 minutes, has been getting a lot of traction in India and expanding rapidly, Zomato said about its own busines model in the email: “We have realised that it is extremely difficult to pull off such a delivery promise with high fulfilment rates consistently, in a marketplace model (like ours).”
When contacted by PTI, a Zomato spokesperson said: “We have decided to shut down our grocery pilot and as of now and have no plans to run any other form of grocery delivery on our platform. Grofers has found high-quality product-market fit in 10-minute grocery and we believe our investment in the company will generate better outcomes for our shareholders than our in-house grocery effort.”
In July, Zomato CFO Akshant Goyal had said grocery was “a large opportunity”.
He had added: “The online grocery is nascent right now but is growing rapidly not just in India but across the world… We are actively experimenting in that space.”
