Zomato will now return to its homebase, and put its weight behind reviving the food delivery business, shifting the focus from groceries.
With the launch of Zomato Market, the food delivery platform had ventured into a new and unknown market of grocery delivery, both to aid the country, and to get some cash flowing amid lockdown times. This was also a way for companies like Zomato and Swiggy to continue operations, even though restaurants across the nation were shutting down. The platform had also forged relationships with online and offline retailers, including Grofers, another online platform with its focus ata grocery delivery.
However, with the 4th stage of the nationwide lockdown, food delivery resumed in various parts of the country. Thus, the company saw a bump in orders and witnessed what could be the revival of the food delivery business. In fact, last month Zomato noted that groceries were only making up for 15% of its total orders.
“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. We have witnessed a strong recovery in these last two weeks since Lockdown 4.0. Now with Unlock 1.0 and restaurants opening up from 8th June, we anticipate the business to recover further in the coming weeks,” a company spokesperson said in a response to a query to Mint.
The food delivery industry had taken a major hit from the coronavirus, ushering in widening losses and numerous layoffs. Zomato was forced to lay off 13% of its workforce, reducing the pay of the existing staff by 50%, to cut losses. Swiggy had to take similar measures, and announced that it would lay off 1,100 employees owing to uncertainty in the market and a need to come out stronger at the other end.
Now that the industry is back, it makes sense that Zomato will be shifting its focus from the ‘high volume low margin’ market of groceries and return to what it does best, food. Swiggy and other platforms like the newly launched Amazon food might also follow suite, putting all their capital in the food delivery business.
Zomato market will still be a part of the platform, but will become peripheral to the main food delivery business.