Zomato is slashing delivery of groceries as it prepares to leave the business almost five months after launch due to poor response and a gradual resumption of its main food delivery. Zomato Market will continue to operate and provide services to users who require on-demand delivery of essential products, a company spokesperson told BloombergQuint in an email response.
The company said it now wants to focus on its core business as the food distribution market is discounted. The online food ordering and unicorn delivery that launched Zomato Market in April after the country entered a full lockdown as people stayed at home, but demand for grocery delivery declined in May.
Since the lockdown restrictions were relaxed, Swiggy and Zomato have seen their grocery business decline. Swiggy, who had also aggressively grown their grocery business, also cut it down in a few of the smaller markets after restrictions were eased, a person familiar with the matter said on condition of anonymity. Swiggy, however, continues to focus on the grocery business and occupies a prominent place in the Top 100 Cities.
Zomato is leaving cities where there has been no demand or muted demand in recent weeks, the person quoted earlier said. Zomato, backed by Ant Financial, will however continue to operate in the top 15 cities, the second person said, adding that the company will exit those markets as demand dies down. The company, however, has ended partnerships and the integration of local grocery stores in all markets.
The online grocery market is already a highly competitive place with big players like Big Basket, Reliance Retail Limited and Amazon India and is already fighting for a big pie. Zomato’s foray is expected to be pitted against rival Swiggy, who has implemented a subscription-based grocery model in the past 12 months. The Ken first reported in June that Zomato was looking to turn around in the grocery business.
“It was expected and although it is a highly competitive category, it took a long time to build a vertical grocery store,” said Satish Meena, senior forecasting analyst at Forrester Research.
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