Chief Financial Officer of Zomato, Akshant Goyal, unveiled that the company has $100 million of investment in Grofers. Company believes its stake in Grofers will bring better results.

Zomato, an Indian food delivery platform, sews up its pilot grocery service which will come into effect on September 17, 2021. Justifying the reasons, Company conveyed through an email to its grocery service partners on Saturday that it had observed loopholes in order fulfillment and couldn’t hold the grip of 15-minute grocery delivery.

Zomato to sew up its pilot grocery service on September 17, says investment in Grofers will generate “better outcomes”
Zomato to sew up its pilot grocery service on September 17, says investment in Grofers will generate “better outcomes”

Confirming the update, one of Zomato’s spokespersons said, 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.”

Under the in-house grocery marketplace model, which started in July 2021, Zomato’s services included grocery delivery within 45 minutes to its customers from their preferred neighborhood stores. It saw “moderate success”. Compared with the express delivery model, the company’s note said, “Store catalogs are very dynamic and inventory levels change frequently. This has led to gaps in fulfillment, leading to poor customer experience. In the same time period, the express delivery model, with under 15 minutes delivery promise and near-perfect fulfillment rates have been getting a lot of traction with customers and is expanding rapidly. We have realized that it is extremely difficult to pull off such a delivery promise with high fulfillment rates consistently in a marketplace model (like ours).”

Zomato has over 10% stake in Grofers, an online grocery delivery service. Validating the news, the Chief Financial Officer of Zomato said that the company has $100 million of investment in Grofers. 

The pandemic has fueled the online grocery delivery service of companies including Grofers, Swiggy, Amazon, and the very recent, Reliance’s JioMart. With the prolonged curfews and lockdowns, people have come to terms with the online delivery services effortlessly, especially when it comes to the grocery segment. With the towering demand amidst the outbreak, the opportunities for the Indian online grocery delivery marketplace are on a noticeable surge and are expected to reach $20 to $25 billion by the year 2025.