Zomato started with grocery delivery business during the lockdown period to make up for the low demand of its core business of food deliveries. The step was also considered to have a strong food against its rival, Swiggy which has been facilitating grocery deliveries for over a year now. A few reports state that the company is planning to shut down its newly launched grocery business.
The development comes as a surprise considering that they recently announced the expansion of service in 80 cities. One of the sources aware of the matter said, “It’s quite surprising, but the company has started downscaling the grocery delivery service in many cities, especially smaller ones. Facilitating delivery (food, grocery etc.) is a cash-guzzling business where every player has been losing money on each delivery. The decision seems to be in line with controlling burn and focus on core business.”
The food delivery companies have been readying their platforms to perform deliveries of other products like alcohol. They have recorded a decline of about 70-80% in orders in the past two months.
In one of the statements, the company said, “Zomato Market will continue to operate and service users who need on-demand delivery of essentials. However, as the country opens up basis Unlock 1.0 relaxations, we are going to spend a large proportion of our time making our food delivery service the safest, and the most loved one in town.”
The online grocery delivery business was picked up by almost two dozen of startups seeing the right opportunity but it is expected that not a lot of them will continue it post things go back to normal. Zomato has been dealing with the reduced business by layoffs and salary cuts. The times are tough and the firm will have to toil hard to go back to the numbers before the entire crisis.