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Sequoia Capital Dumps 2% Stake In Zomato, Reducing Shareholding To 4.4%

Deepinder Goyal led Online food delivery platform Zomato will be shutting down its grocery delivery service from September 17 as the company is struggling to fulfil the orders on time, leading to poor customer experience.

As per PTI, in an email to the affiliated grocery partners, Zomato said, “At Zomato, we believe in delivering best in class services to our customers and largest growth opportunities to our merchant partners. We don’t believe that the current model is the best way to deliver these to our customers and merchant partners. Hence, we intend to stop our pilot grocery delivery service effective 17 September 2021“.

The email highlighted, “store catalogues are very dynamic and inventory levels change frequently. This has led to gaps in order fulfilment, leading to the poor customer experience“.

In the same time frame, the express delivery model, which promises delivery within only 15 minutes and has near-perfect fulfilment rates, has gained a lot of momentum with clients and is increasing quickly, according to the company’s email.

“We have realised that it is extremely difficult to pull off such a delivery promise with high fulfilment rates consistently, in a marketplace model (like ours),” the mail said.

Zomato spokesperson, in a statement to PTI, 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. Grofers has found high-quality product-market fit in 10-minute grocery stores and we believe our investment in the company will generate better outcomes for our shareholders than our in-house grocery effort.” 

In August, CCI approved the Zomato-Grofers deal, in which Zomate acquired an almost 9.3%  stake in each of Grofers India Private Limited (Grofers India) and Hands-on Trades Private Limited (HoT). 

Grofers dedicatedly delivers home groceries to the customers whereas Zomato has a vertically integrated business model. 

In July Zomato CFO Akshant Goyal had said, “It (grocery) is a large opportunity. The online grocery is nascent right now but is growing rapidly not just in India but across the world…” “We are actively experimenting in that space and recently invested USD 100 million for a minority stake in Grofers, with the idea of getting more exposure to that space and building our strategies and plan around that business“.

Zomato came up with its grocery delivery service in July this year in selective areas, offering 45 minutes delivery to its customers.

 On 23 July, the food delivery platform got listed, and so far since the IPO, the stock touched the high of Rs 151.40 and the all-time low is Rs 0.050. Currently, the stock is trading in the range of Rs 142-144. 

 

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.

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