Zomato, the food delivery giant and restaurant aggregation platform, recently announced that it has stopped its grocery delivery services. This was apparently done due to gaps being present in the order fulfilment process, as well as poor customer experiences and increased competition from the existing players in the market which were promising to provide express delivery in 15 minutes, the food-tech giant said in an email to its grocery store partners. The email which was sent on September 11, 2021, by Zomato, had informed its grocery store partners that it intended to stop the pilot initiative effective from September 17, according to PTI.
“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 email read, according to PTI.
Zomato said that its investment in grocery start-up, Grofers, would generate better results than the efforts in its in-house grocery delivery services. A spokesperson for Zomato had said in a statement, “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.”
The company had started its grocery service pilot across a select few markets to date and the service undertaking was offering grocery delivery within 45 minutes. Zomato had entered the grocery delivery market in July of this year through the use of a marketplace model. This essentially allowed the customers to shop for groceries to shop from their local stores that were partnered up with Zomato through its platform. This is different from the business models that the competition such as Swiggy and Dunzo run which revolves around dedicated dark stores in key locations in a select city, which allows them to deliver groceries to their customers in a span of 15 to 30 minutes.
However, it should be noted that Grofers, which Zomato has a 10 per cent stake in, had promised a 10-minute delivery. A fact that Zomato believes will bear greater fruit in the long run as per the statement that was made.
The email went on to say that, In the same time period, the express delivery model, with under 15 minutes delivery promise and near-perfect fulfilment rates has been getting a lot of traction with customers. The company added that these services are expanding rapidly. It, therefore, realised that it would be extremely difficult to pull off a delivery promise of such a calibre while still trying to meet high fulfilment rates consistently with a marketplace model like theirs (Zomato’s), according to Money Control.
As reported by PTI, the email read, “store catalogues are very dynamic and inventory levels change frequently. This has led to gaps in order fulfillment, leading to poor customer experience."
“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)," the email added, as per reports.
The company had initially jumped on this service delivery area at a time when the Covid-19 pandemic was raging and grocery delivery was in high demand. Delivery services such as the aforementioned Dunzo, Swiggy and Grofers are amongst the pack leaders when it comes to rush-order grocery delivery to the customers’ doorstep.
It should also be noted that this was not the company’s first foray into the grocery delivery business. Last year, when food delivery had seen its initial peaks due to the pandemic, Zomato had in fact tried its hand at the endeavour. However, it quickly exited the segment as the core business was also facing challenges.