Here's why Zomato stopped its grocery delivery service

Food delivery platform Zomato has now discontinued its grocery delivery service due to a shortage of order fulfillment, poor customer experience, and rising competition from rivals Swiggy and Dunzo that deliver groceries in 15 minutes. The company had reportedly said that the investment in Grofers will bring much better outcomes than the in-house grocery effort.

A Zomato spokesperson told Moneycontrol, "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 and we believe our investment in the company will generate better outcomes for our shareholders than our in-house grocery effort."

Zomato will stop its grocery delivery service from September 17. The service was available in a few selected markets and it used to deliver within 45 minutes. 

In the month of July, Zomato started the grocery delivery services via a marketplace model wherein it helped customers to shop from their neighborhood stores. 

Meanwhile, Swiggy, Dunzo follow a different business model where they make dedicated dark stores and then they deliver goods within 15-20 minutes. 

Reportedly, Zomato had informed its grocery partners that it stopped the service due to moderate success. 

"Store catalogues are very dynamic and inventory levels change frequently. This has led to gaps in  order 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 has been getting a lot of traction with customers, and is expanding rapidly. We have realised that it is it extremely difficult to pull off such a delivery promise with high fulfillment rates consistently in a marketplace model (like ours)," the note read.