Zomato has decided to discontinue its grocery delivery service, which it launched in July this year, due to gaps in order fulfillment and the popularity of the 15-minute grocery delivery service in the recent past, the company informed its grocery store partners on Saturday. ‘We have decided to shut down our grocery pilot and as of now, we have no plans to run any other form of grocery delivery on our platform. Grofers has found a 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,’ said a Zomato spokesperson.
On September 17, the company will end its grocery delivery pilot program. Zomato’s grocery delivery service promised order fulfillment within 45 minutes, and it said in an email on Saturday that the pilot saw ‘moderate success’. ‘Store catalogues are very dynamic and inventory levels change frequently. This has led to gaps in fulfilment, leading to poor customer experience. In the same period (of the two months pilot), the express delivery model, with under 15 minute delivery and promise & near perfect fulfilment rates has been getting a lot of traction with customers and expanding rapidly. 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),’ Zomato said in the email.
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The company announced its plans to offer grocery delivery services at the launch of its initial public offering in July. Chief Financial Officer Akshant Goyal said at the time that grocery represents a large opportunity and is still in its infancy. The CEO also confirmed Grofers’ $100 million investment for a minority stake in the food delivery company. Grofers has doubled down on its 15-to-10-minute delivery strategy since late July, expanding it to ten cities by the end of August.
During the Covid-19 pandemic, food delivery in India has seen a significant boost. Industry estimates indicate that the market has grown by close to 80 percent to $2.66 billion in 2020, and is being positioned for growth to $20-25 billion by 2025.
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