For now, Zomato will scale the warehouses in the top metros before moving to smaller cities
Zomato opened its second Hyperpure warehouse on Monday in New Delhi
Online food ordering app Zomato is expanding the reach of its online business-to-business (B2B) food ingredient ordering platform, Hyperpure, to 16 more cities, taking the total to 18 cities including Bengaluru and New Delhi. The restaurant search and discovery app aims to offer more services to restaurants across India over the next two years.
Zomato opened its second Hyperpure warehouse on Monday in New Delhi and is set to add 20 more warehouses in India by end-2020 with an estimated investment of ₹55 crore, said a top company executive.
The Gurugram-headquartered firm had acquired Hyperpure (formerly WOTU) in 2018, as a B2B technology platform that lets restaurant owners, caterers, hotels, and other food service businesses order fresh produce, packaged food and poultry, among other products. Since then, Zomato has added two warehouses that act as delivery hubs, first in Bengaluru and now in Delhi—a signal of its intent to dominate the food supply-to-ordering ecosystem, especially as competition from Swiggy intensifies.
“For restaurants, Zomato has become a very holistic provider for delivery orders, of customers who want to dine out and, now, as a raw material supplier to them," said Gaurav Gupta, co-founder and chief operating officer, Zomato.
The Delhi warehouse gives Hyperpure access to more than 35,000 restaurants listed in the Delhi-NCR area on Zomato. Each warehouse has been set up with an approximate initial investment of $400,000, Gupta said.
Currently, Hyperpure services 1,000 restaurants in Bengaluru. With the Delhi warehouse, it hopes to service 3,000 restaurants.
Zomato’s move to increase investments in such businesses comes even as it looks to rapidly increase its presence across markets. In fiscal year (FY) 2019, it increased its presence in more than 200 cities in India, up from 15 cities in FY18, with more than 100,000 restaurants listed on its platform. Zomato’s revenue jumped from $68 million in FY18 to $206 million in FY19, primarily driven by its delivery vertical, according to the company’s annual report released earlier in April.
The firm has been building businesses inorganically through a clutch of acquisitions, including drone-delivery startup TechEagle Innovations and Bengaluru-based TongueStun Food, an aggregator of caterers and restaurants for office canteens.
On future acquisitions, Gupta said: “Some of the gaps we saw last year we’ve plugged a lot of them...Hyperpure was one of them. The idea is to scale most of them up in the coming year."
Analysts who track the sector said that building warehouses could help the company solve the complex logistics and supply chain, especially when it comes to procuring goods from a single source at scale and delivering to restaurants as a single source as well.
“This will help them in the broader food ecosystem and also facilitate greater control from farm/procurement to fork," according to Ankur Pahwa, partner and national leader, e-commerce and consumer internet, EY India. “Adjacent areas of operations that build synergies and improve efficiencies are needed to support discounts in the food-tech business. To improve unit economics you have to go deeper into the business and improve infrastructure usage, better client engagement and raise delivery efficiencies. In future, A customer-facing side can also leverage the existing customer base and hyperlocal presence to significant effect."
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