Business / Zomato to shut down online grocery delivery

New Delhi: Zomato has decided to shut down its grocery delivery service, which it began in July this year, 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 email 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.

The company will be pulling the plug on its grocery delivery pilot on September 17.

Zomato's grocery delivery service promised order fulfilment within 45 minutes, and it told grocery partners in the email that this pilot saw "moderate success" in the email on Saturday.

"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 ot 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.

Zomato had announced plans to roll out its grocery delivery service at the launch of its initial public offering in July. At the time, Chief Financial Officer Akshant Goyal had said grocery is a large opportunity and it is still in the nascent stage. He also confirmed the food delivery and listing company's $100 million investment 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 ten cities by the end of August.

During the Covid-19 pandemic, India's grocery delivery has 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.