Online food delivery platform Zomato will stop its grocery delivery service from today (September 17), mainly on account of gaps in order fulfillment leading to poor customer experience. This is Zomato's second exit from the grocery segment.
The company had entered the segment last year during the lockdown on account of the COVID-19 pandemic, but exited the business on the recovery of its food delivery business.
Zomato had launched the pilot grocery delivery service in July this year in select markets offering grocery delivery within 45 minutes to its customers
In July, Zomato CFO Akshant Goyal had said, "It (grocery) is a large opportunity. The online grocery is nascent right now but is growing rapidly not just in India but across the world..
"We are actively experimenting in that 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 strategies and plan around that business."
The company recently invested $100 million (around Rs 745 crore) for acquiring a minority stake in grocery delivery platform Grofers.
But in its recent email to its grocery partners, Zomato said, "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 mentions that "store catalogues are very dynamic and inventory levels change frequently. This has led to gaps in order fulfillment, leading to poor customer experience"
In the same time period, the express delivery model, with under 15-minute delivery promise and near perfect fulfilment rates has been getting a lot of traction with customers and expanding rapidly, the company said in the email
"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)," it stated.
A Zomato spokesperson told PTI, "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."
Co-founder exits
This week, Zomato's founder Gaurav Gupta has quit the food delivery platform. He was the head of supply at the recently-listed company. The resignation came just days after the company decided to wind up with grocery delivery and nutraceutical business.
Gupta was a key person in the launching of the company's nutraceutical business.
In an email to everyone in the company he said: "I am taking a new turn in my life and will be starting a new chapter, taking a lot from this defining chapter of my life - the last 6 years at Zomato."
"We have a great team now to take Zomato forward and it's time for me to take an alternate path in my journey. I am very emotional as I write this and don't think any words can do justice to how I am feeling right now.
