Grocery service: Zomato calls it quits after pilot
Zomato has decided to shut down its grocery delivery service — pilot for which began in July — due to gaps in order fulfilment and the traction 15-minute grocery delivery has been getting in the recent past, it told grocery store partners in an e-mail. The company will be pulling the plug on its grocery delivery pilot on September 17.
"We have decided to shut down our grocery pilot and as of now, have no plan to run any other form of grocery delivery on our platform. Grofers has found high quality product market fit in 10minute grocery and we believe our investment in the company will generate better outcomes for our shareholders than the in-house grocery effort," said a Zomato spokesperson.
Zomato's grocery delivery service promised order fulfilment within 45 minutes, and it told grocery partners in the e-mail on Saturday that this 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 and is 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 stated.
The food delivery giant had announced plans to roll out its grocery delivery service at the launch of its initial public offering in July. Chief Financial Officer Akshant Goyal then had said grocery is a large opportunity and the delivery space is still in the nascent stage. Zomato has invested $100 million for a minority stake in Grofers.
Grofers has been doubling down on its 15-to-10-minute delivery strategy since late July, expanding it to 10 cities by the end of August.
During the Covid-19 pandemic, India's grocery deliveries have seen a huge rise in demand. By industry estimates, the market rose nearly 80 per cent to $2.66 billion in 2020 and is on track to reach $20-25 billion by 2025.