Zomato to stop online grocery delivery service from Sept 17

Zomato announced the move in an email, Economic Times reported, adding that the grocery service launched as a pilot in July and had moderate success and faced a few challenges.

The pilot was launched from Delhi, operated on a marketplace model, allowing its users to order directly from stores.

"At the same time the express delivery model, with under 15-minute deliveries and near-perfect fulfillment rates, has been getting a lot of traction with customers and expanding rapidly," the email read, according to Economic Times. "We have realised it is extremely difficult to pull off such a delivery promise with high fulfillment rates consistently in a marketplace model."

The grocery delivery business was overseen by Mohit Gupta, one of the cofounders and the head of new businesses at Zomato.

The company also confirmed the decision in a statement, the ET report said. “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,” said a Zomato spokesperson. “Grofers has found high-quality product-market fit in the 10-minute grocery category and we believe our investment in the company will generate better outcomes for our shareholders than our in-house grocery effort."

Zomato first entered grocery delivery when the government imposed nationwide lockdown in 2020, but closed it after it failed to expand.

According to the RT report, Zomato made a comeback amid fierce competition from Reliance Industries-owned JioMart, Tata group’s BigBasket and Swiggy's Instamart, besides hyperlocal delivery platforms such as Google-backed Dunzo.

ET reported on May 7 that Zomato was finalising a $100 million investment in Grofers at a valuation of $1 billion.

Meanwhile, Zomato's rival Swiggy has taken Instamart to 11 cities now from just two a year ago, according to the report.

Grofers, Instamart, Dunzo, and BigBasket also plan to improve their  express delivery model, it added.

In an interview with ET, cofounder Deepinder Goyal had said, “We don’t have much idea (about online grocery) and are just trying to learn. We think it’s a big space, but we are not sure if we want to do it in the long term or not,” Goyal said. “The investment in Grofers is separate. We have our own grocery offering which is a marketplace model that went live in Delhi two-three days ago.”