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There’s more than food on plate of delivery firms Swiggy and Zomato

, ET Bureau|
Last Updated: May 15, 2020, 10.06 AM IST
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Analysts said food delivery orders, already down at least 70% over the last two months, are not expected to recover before year-end as people adjust to a new normal in the wake of the outbreak.

Highlights

  • Rival Swiggy is also preparing to launch a similar service.
  • For Zomato, the push to diversify beyond food delivery has been far more pronounced in the last two months.
  • Both Zomato and Swiggy have put on hold plans to launch their bike taxi services but may revisit the idea early next year.
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BENGALURU: Food delivery apps Swiggy and Zomato, battling a major slowdown in their core business due to the Covid-19 pandemic and resultant lockdown, are thinking of expanding their logistics services to businesses outside their platforms, people in the know have said.

Zomato is also eyeing the launch of a consumer-facing pick up and drop service, mirroring rival Swiggy’s Genie service, one of the people said.

Both players are talking to several states to deliver liquor to customers from authorised retail outlets. This comes at a time when both food aggregators have made a big push in delivering grocery and products for daily use during the ongoing nationwide lockdown.

For its B2B push, Gurugram-based Zomato has started signing up merchants for pre-paid and cashless last-mile logistics services, according to documents reviewed by ET.

Rival Swiggy is also preparing to launch a similar service, the people said. For example, if a store wants to offer home delivery as a service within an 8-10 km radius, they could use Zomato and Swiggy's fleet, competing directly with logistics platforms like Shadowfax, Loadshare, and a clutch of other hyperlocal logistics players.

Analysts said food delivery orders, already down at least 70% over the last two months, are not expected to recover before year-end as people adjust to a new normal in the wake of the outbreak. The recovery is expected to take even longer in smaller towns and cities.

The online food ordering platforms’ idea is that diversification beyond food delivery will make up for lost demand from their core offering, with hyperlocal deliveries helping numbers rise significantly enough to make their businesses viable, investors told ET. For Zomato, the push to diversify beyond food delivery has been far more pronounced in the last two months. Before that, the focus was solely on expanding its portfolio in the restaurant ecosystem.

For Swiggy, while grocery and concierge services have existed for over a year, the aggressive scale-up of these services has happened over the last fifty days.

“We are operating at a fraction of what we were pre-Covid-19...we are still shut in 200 cities out of 500-plus cities...but it is important to focus on what we can do and cope with the situation,” said Vivek Sunder, chief operating officer of Swiggy at the Economic Times Virtual Tech Summit on Tuesday. “As cities open up and governments allow, more stores will come up,” he added.

Zomato did not respond to ET’s email seeking comment till press time on Wednesday.

Both Zomato and Swiggy have put on hold plans to launch their bike taxi services but may revisit the idea early next year.

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