Zomato to discontinue online grocery delivery service from September 17

KEY STORY

• Online food aggregator platform Zomato on Sunday said it will shut down its grocery delivery service from September 17, 2021 due to lapses in order fulfilment leading to poor customer experience.

• In an 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”.

• The company also said its investments in Grofers, which claims to make grocery deliveries in 10 minutes, will generate better shareholder value in the domain.

• “Have no plans to run any form of grocery delivery on our platform. Grofers has found high quality product market fit in 10 minute grocery & we believe our investment in the company will generate better outcomes for our shareholders than in-house grocery effort.”

• The food tech company in a mail sent to its grocery partners on Saturday said it intends to stop its pilot grocery delivery service effective September 17. The company had started the service across a few selected markets in July this year promising to make deliveries within 45 minutes.

• The mail further mentioned that 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.

CONCLUSION

• “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 added.

• Earlier, Zomato said it invested 100 million or Rs 745 crore in Grofers for a minority stake in latter.

• Zomato CFO Akshant Goyal in July said, “It’s a big opportunity (grocery).” “We are actively experimenting in that market and just invested USD 100 million for a minority investment in Grofers, with the goal of acquiring more exposure to that space and creating our strategy and plans around that business,” he added.