In its earlier version, Zomato Xtreme – which leveraged the rider fleet of the company’s food delivery platform – was targeted at both small and large merchants for intracity deliveries of packages weighing up to 10 kg – on the lines of services provided by companies such as Flipkart-backed Shadowfax and Tiger Global-funded Porter. It had also tied up with epharmacy platform Tata 1mg for last-mile deliveries.
The focus of Xtreme, which was rolled out in October last year, is now being recalibrated.
“The service is being tweaked to focus on the core food delivery strength of the company…there are several restaurants that deliver directly. This may still be an experiment that the company may or may not scale,” one of the persons cited above said.
As per the company’s annual report, Zomato had more than 400,000 active monthly delivery partners in its food delivery operation. The company’s quick commerce unit, Blinkit, operates with a dedicated fleet of riders.
“There are several restaurants across cities who want to maintain their own channels for ordering but want the quality of last-mile delivery that Zomato offers…in the earlier experiment, too, the scale never became so big that it would affect the company’s food delivery services for its restaurant partners but if it ends up achieving a certain scale, it will take a call accordingly,” another person briefed on the development said.
Discover the stories of your interest
The person said the business model for the new offering is being worked out, but it is expected to be on the lines of Zomato’s current distance-based fee mechanism. The project was being run by Zomato’s food delivery team.Responding to a set of queries by ET, a Zomato spokesperson said, “These claims are baseless and not true.”
Zomato’s food experiments
The Gurgaon-based company has experimented with its food delivery service through multiple features and offerings.
These include the intercity delivery service Zomato Legends, which was fully shut down in August. In 2022, the company was also experimenting with 10-minute food delivery in Gurgaon – which it later repurposed into Zomato Everyday, its “homely meals service”.
It recently also rolled out Brand Packs, allowing users to buy coupons for additional discounts on food delivery from restaurants they order frequently.
Despite the rapid growth in quick commerce, food delivery is still the largest business for Zomato – comprising almost 60% of its gross order value (GOV) from all business-to-consumer (B2C) verticals. In the June quarter, Zomato reported Rs 9,264 crore in GOV from its food delivery business, 26% higher year-on-year.
Speaking at The Economic Times Startup Awards on October 5, Zomato founder and CEO Deepinder Goyal said the food delivery use case deserved to be on a separate app.
Zomato is planning to move the dining out offering – which shares space with food delivery on the platform’s main app – to the upcoming District app. District will encompass all of Zomato’s going-out businesses including dining out, entertainment and live ticketing. “Dining out is part of the main app…but I don’t really want it to be there. The food delivery use case deserves to have a separate, standalone app,” Goyal said at the ETSA. He also pointed out that in food delivery, the moat for any company is the number of riders it has available on the ground.
On Monday, Zomato’s shares ended trading 0.8% up at Rs 279.80 on the BSE.