- Zomato plans to shut down its newly launched grocery delivery service, Zomato Market, according to two sources that are aware of the development.
Zomato plans to shut down its newly launched grocery delivery service, Zomato Market, according to two sources that are aware of the development. This comes as a surprise as the food tech unicorn was on its way to expanding the grocery delivery operations and revealed recently that it is available in 80 plus cities in India.
“It’s quite surprising, but in many cities, particularly smaller ones, the company has started to downscale the grocery delivery service,” one of the sources said on condition of anonymity. “Facilitating delivery (food, food, etc.) is a cash-guzzling business in which each player has lost money on each delivery. The decision seems to be in line with burn management and focussing on the heart
For its arch-rival Swiggy, which has been doing grocery delivery for over 12 months, Zomato Market was expected to be a counter-attack from Ant Financial-backed firm. Besides, the expansion of the grocery delivery service was part of the company ‘s plan to offset the sharp downturn in business during the lockdown period.
Not only grocery but also Swiggy and Zomato have begun delivering alcohol home in select states. Both food delivery platforms faced a 70-80 percent drop in the number of orders over two months, according to the industry’s estimate.
Zomato said, “Zomato Market will continue to operate and service users needing essential on-demand delivery. However, as the country opens up ground Unlock 1.0 relaxation, we will spend a large proportion of our time making our food delivery service the safest, and the most loved one in town.
It is worth noting that the Zomato and Grofers also had conversations about the merger. There’s no further word on the issue, though, so it looks as if it didn’t progress past the preliminary stage.
Since Covid-19 has disrupted the company’s operations by a large margin, in its core business ~ food delivery, the company will have to wait and work hard to reach the pre-crisis scale. Zomato also laid off 13 percent of its workforce by taking steps to extend the runway and slashed senior employee salaries.
As for grocery, during the lockdown period, Zomato wasn’t a new entrant. Meesho and Cure. Fit began offering grocery stores early this year to detect the right timing for entering the segment. Over two dozen startups have also started grocery shopping, but most are likely to withdraw it as the lockdown gets relaxed.