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Zomato, a Gurugram-based food delivery platform, will discontinue its grocery delivery services from today, that is, September 17. This is the second time, Zomato would be scrapping its online grocery delivery service after launching it in April, last year. Zomato started the pilot for its 45-minute grocery delivery service in a few cities, starting from Delhi-NCR, in July this year.
In an email to its grocery partners, Zomato explained why it decided to exit from the business. According to Zomato's email, it faced regular challenges in inventory and gaps in order fulfilment leading to poor customer experience.
“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 company said in an email.
Zomato added that the " Express delivery model, with under 15-minute deliveries and near fulfilment rates, has been getting a lot of traction with customers and expanding rapidly. We have realised it is extremely difficult to pull off such delivery promise with high fulfilment rates consistently in a marketplace model".
Zomato, which has invested $100 million (around ₹745 crore) for acquiring a minority stake in Grofers (vegetables and grocery delivery platform), said the latter would generate better incomes for its stakeholders.
Zomato has explicitly stated that it has no plans to run grocery delivery services on its platform in the future.
"We have decided to shut down our grocery pilot and as of now, 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," a Zomato spokesperson told PTI news agency.
Zomato re-entered the grocery business in July this year to compete against Reliance Industries JioMart, Tata Group's BigBasket, and Swiggy's Instamart.
Zomato decided to enter the online grocery delivery segment in April 2020 during the first wave of the Covid-19 pandemic.
This week, Zomato's co-founder and Head of supply Gaurav Gupta left the Indian food delivery firm after six years. CEO Deepinder Goyal confirmed Gupta's exit. "Thank you GG for everything you have helped Zomato achieve over the last few years," he wrote in a blog.
According to a Reuters report, Zomato laid off about 70 people from its sales team in September. Zomato had also exited several of its international markets to focus solely on its Indian businesses in the build-up to its July market debut.
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