Zomato will launch 10-minute food delivery in Gurugram next month. Is this a good strategy?

Starting with Gurugram next month, online food delivery platform Zomato announced on Monday that it will deliver food in a record time of 10 minutes.

Zomato co-founder, Deepinder Goyal, said, “After becoming a frequent customer of Blinkit (one of Zomato’s investments in the fast commerce space), I started thinking that the delivery time Zomato’s 30-minute average is too slow and will soon become obsolete.”

Called Zomato Instant, Goyal in a blog post said no one in the world has so far delivered hot and fresh food in less than 10 minutes at scale, and the company is eager to be the first to create this category, on a global scale.

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When listing, brokers were betting on Zomato’s grocery delivery prospects. But in September 2021, Zomato surprised the street by closing its own grocery store and investing in Grofers (August 2021).

Subsequently, Zomato shut down Grofers’ full-time delivery business to focus solely on Q-commerce and 10-minute delivery – renaming it Blinkit in December 2021.

Unable to scale BlinkIt at the expected pace, Zomato announced a $150 million loan at 12% interest to BlinkIt in March just as reports of a merger between the two are making the rounds.

Now what confuses the street is that if and when they merge the two – then they’ll be basically the same place they started (own grocery store and food delivery) – but with only 10 minutes of groceries and food delivery as an option and lots of investor dollars burned.

This, even as their operating losses have increased, average order values ​​have declined, and the cost of incremental business has increased. Not to mention, the stock is down 52% from its peak and sits just above its issue price of Rs 76.

(Edited by : Jomy Jos Pullokaran)

First post: STI