IPO-bound Zomato plans to restart grocery delivery ops

  • However, the food delivery firm has not specified the exact timeline for resuming the service
  • Zomato started delivering groceries and essentials under the Zomato Market offering last year

Tarush Bhalla
Updated8 Jul 2021, 11:11 PM IST
The food delivery startup delivered essentials and groceries briefly during the first lockdown in 2020.
The food delivery startup delivered essentials and groceries briefly during the first lockdown in 2020.

India's largest food delivery platform Zomato Ltd, which will launch its mega public listing next week, plans to resume grocery delivery services in the next few quarters after suspending the service in June last year.

Zomato started deliveries of essentials and groceries under the Zomato Market offering on its app, to exploit a surge in demand for e-groceries during the first wave of covid-19 as most people remained cooped indoors during a strict nationwide lockdown.

Zomato’s chief financial officer Akshant Goyal did not provide an exact timeline for resuming the service.

Meanwhile, addressing a news conference on Thursday, Goyal confirmed Zomato’s $100 million investment in Gurugram-based e-grocer Grofers.

Last week, Zomato also sought an approval from market watchdog Competition Commission of India (CCI) to buy a 9.3% stake each in Grofers India Pvt. Ltd and its wholesale unit Hands On Trades Pvt. Ltd. The foodtech major was also looking to acquire certain rights in Grofers’ Singapore entity Grofers International Pte. Ltd.

The $120 million deal, which will also see the participation of New York-based investment firm Tiger Global, is expected to value Grofers at a little more than $1 billion, two people aware of the matter said, requesting anonymity.

Zomato on Thursday said it is looking at the grocery segment purely from an “experimental” mindset.

“Grocery is a large opportunity and it is in the nascent stage right now, but growing rapidly. We think our platform lends itself well to us doing more than what we do today. So, I think we are actively experimenting in the (grocery) space, and recently invested $100 million for a minority stake in Grofers, with the idea of getting more exposure to that space and building our own strategies,” said Goyal.

“Apart from investing in Grofers, we will also be launching groceries on the Zomato app soon, foraying into the space to see how fast we can grow,” said Goyal.

Last year, Zomato inked direct partnerships with several packaged consumer goods firms and on-boarded local kirana stores in an effort to expand grocery deliveries to 185 cities. It had also partnered with Grofers for last-mile delivery of essentials.

However, with the first unlock, Zomato chose to re-focus on the heavily impacted food delivery business to revive its fortunes.

“Food aggregators were not doing food delivery (during the first months of the pandemic) and customers needed grocery in their home to be able to cook. And because of our network, we enabled grocery deliveries to serve customers. But once food delivery came back, we turned our focus back to our core proposition. And now, we are coming back to experiment and see how we build this hyperlocal part of the business (with groceries),” Zomato co-founder Gaurav Gupta said at the press conference.

Zomato also entered the functional foods or dietary supplements or nutraceutical market in March this year.

“Nutraceuticals is another attempt outside the core food delivery space we continue to experiment in and are still piloting the offering. I think the next few quarters will tell us the sustainability and viability of this business. We have launched this on a pilot basis in a few cities,” said Goyal.

Online food grocery currently accounts for 0.6% of the overall retail market in India, and almost 8.6% of overall online retail. In 2020, gross merchandise value registered by e-grocery firms stood at $3.3 billion.

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First Published:8 Jul 2021, 11:11 PM IST
HomeCompaniesStart-upsIPO-bound Zomato plans to restart grocery delivery ops

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