Is Zomato Ready To Challenge Swiggy Stores With Grocery Deliveries?

Amid coronavirus pandemic, as Indians look to hoard ahead of expected lockdown, foodtech unicorn Zomato is now looking to join grocery delivery industry. The company is reportedly in talks to partner with grocery delivery startups Grofers and BigBasket to sell food products and essentials on its platform by facilitating their deliveries.

Tentatively called Zomato Market, the grocery delivery service is expected to go live by next week. The ET report added that Zomato is currently in the process of optimising deliveries for the grocery section, as well as tackling challenges arising for its delivery partners during the pandemic. Offline stores which work with Grofers will be listed on Zomato’s app and consumers would place an order on Zomato with deliveries fulfilled by the food delivery unicorn.

The company will begin with a pilot in Delhi-NCR with Grofers, and BigBasket is also expected to come on board.

As a result of the self-imposed quarantine in many homes in urban India, both Grofers and BigBasket have noted a hike in their daily orders. Grofers has noted a 5% to 7% hike during weekdays and an 80% increase in demand during the weekend. Meanwhile, BigBasket has noted a 2x growth in their orders, with a 15 to 20% increase in the average order size.

One of the reasons why online sales of groceries have shot up is because of people’s reluctance to go outside with the threat of coronavirus looming over. Both Grofers and BigBasket have ensured that the delivery partners are well aware of the coronavirus pandemic and take precautions.

Both companies claim to have started disinfecting and sanitising their workstations, warehouses, delivery crates and all other equipment used on a regular basis. Besides this, both have now encouraged cashless payments to keep both customers and delivery executives safe from any possible exposure.

With Zomato Market, it is now challenging its arch-rival Swiggy, which launched Swiggy Stores last year. The company is also indirectly into delivery of essentials such as milk, bread, over-the-counter medicines and household items.

Morgan Stanley expects the online food and grocery segment to become the fastest-growing segment in India, expanding at a CAGR of 141% by 2020 and contributing $15 Bn or 12.5% of overall online retail sales. According to another report, the Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022.