Zomato Sets Eyes On $10.2 Billion Online Grocery Delivery Market in India

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The 21-day nationwide lockdown imposed in India due to the Covid-19 outbreak fueled a massive change in existing consumer behaviour. People have now pivoted to spending a huge chunk of their money on essentials such as groceries as opposed to resorting to their normal spending habits.

This significant change in consumer behaviour during these tough times caught the eye of Zomato which is now reportedly foraying into the space of delivering groceries besides delivering food from restaurants.

It was during last week when the Gurugram-headquartered food delivery unicorn Zomato’s plans to launch ‘Zomato Market’ was unveiled for the first time. It was reported that they were in the process of optimising the deliveries for their grocery section which would allow consumers to place an order for groceries from offline stores which are partnered with Grofers. They also mentioned that they were tackling a lot of challenges related to their delivery partners who are working during the pandemic.

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Zomato was expected to do a soft pilot launch in the Delhi-NCR region with Grofers along with talks of BigBasket coming on board as well.

Swiggy which is the arch-rival of Zomato too has already been offering grocery delivery through a feature called ‘Swiggy Stores’ on their app.

The other notable key players who have also entered into this space are Meesho, Snapdeal, BharatPe, DealShare, JioMart, NoBroker and ShopClues among others.

Grocery Delivery: A Well-Calculated Move

The news of the Covid-19 outbreak plunged everyone in an instant panic mode and this, in turn, led to the demand for groceries surge massively. Now, grocery delivery companies such as BigBasket, Grofers and others started facing problems to meet these increased demands due to the breakdowns in the supply chain all thanks to the lockdown restrictions coming into play. However, these companies are now back on track but are focusing on fulfilling their existing accumulated delayed orders first.

This situation clearly presented Zomato with an opportunity they could very easily exploit with their existing delivery fleet at standby and their business facing disruption due to the lockdown. Therefore, foraying into the grocery delivery space and ramping up the pace of operations at this particular moment makes a lot of sense for Zomato.

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According to a research firm RedSheer, the business of online grocery delivery in India is estimated worth $10.5 billion market by 2023. BigBasket and Grofers, together, account for a lion’s share of the market. While BigBasket attends 100,000 orders per day while Grofers manages 40,000 orders daily.

India’s overall retail market was estimated $805 billion in 2018. Online retail accounted for just 4.5% of this. However, the figure is expected to swell to 7% by 2023. Interestingly, online food and grocery retail in India will account for 1.2% of the total market.

In light of the now increased demand, the grocery market space is ripe for disruption and is up for grabs. However, if the company has chalked out a long term strategy to continue into this space is a question that needs answering.

Assuming post the end of lockdown and the Covid-19 outbreak being curbed, the now surged demand for groceries lowers down to its normal state, the amount of competition in this space will be huge as biggies such as Amazon, Flipkart, Grofers, BigBasket along with many other smaller players already exist in this space.

It would surely be interesting to observe how Zomato, who has only recently entered into this grocery delivery space amid this outbreak, is able to sustain and grow after things return to normal. We will keep you posted.

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