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Zomato and Swiggy have started bearing the brunt of lockdown now. Both the platforms witnessed a sharp decline in the orders immediately after the lockdown. According to the reports, the food delivery orders for Zomato and Swiggy have dropped 70% amid the pandemic.
Most of the restaurants are shut, and people have stopped ordering food from outside during the lockdown.
“From a steady state of 2.5 million deliveries a day, today we are at sub 1 million orders which are marginally inching up,” said an investor in the food delivery space to ET.
The platforms are facing some difficulties in delivering the orders in some parts due to certain confusions. The RWA’s and resident’s associations have also banned the entries of food delivery boys in many locations. Zomato and Swiggy are also in touch with the authorities to sort out some issues which can make the deliveries smooth in the coming days.
COVID-19 - Restaurant Industry severely impacted
The food delivery platforms like Zomato and Swiggy are open, but there is a shortage of delivery boys and restaurant partners. Restaurants have to step back, and because of very limited or no orders, they are finding it difficult to sustain. The Curfew like situation and fear have prompted people to spend less. The food orders from customers have almost dried up, and as a result, most of the restaurants have shut shop in India.
There are only 5-6 restaurant chains in India having enough cash reserves to sustain for more than a month. One of them is Dominos, which is still operational and serving their customers. However, there is a need for a bailout package from the government if there is no improvement after May
Zomato raises $5M from Baillie Gifford affiliate fund
Amid the slowdown, there was some good news as well. Zomato has raised close to $5 million (Rs 38.20 crore) from Pacific Horizon Investment Trust, a fund managed by British investment manager Baillie Gifford. The same investment management firm had earlier invested in Flipkart and homegrown ride-hailing major Ola.
Marico Partners with Zomato and Swiggy to Deliver FMCG products
Since Zomato and Swiggy have a well-organized delivery infrastructure, they have shown their interest to deliver groceries and other essential items. Grofer’s has already taken the lead and is delivering groceries from kirana stores after partnering with Punjab government.
Marico Ltd has come up for the rescue of Zomato and Swiggy. Mumbai-based packaged consumer goods company has launched “Saffola Store" in partnership with online food ordering apps Zomato and Swiggy. Under this partnership, these platforms will deliver its range of oats and cooking oils to consumers.
On the Zomato app, there is going to be an option of Saffola Store. The service in Delhi-NCR area and Bangalore is already operational. Marico is planning to roll out this service very soon in other cities such as Mumbai, Kolkata, Chandigarh and Ahmedabad.
On Swiggy, you will find the services of Saffola Store in Gurgaon, Delhi NCR, Bangalore, and Mumbai.
Recently, The Brand Global team has reported that Zomato and Grofers would be delivering essential items in a partnership during the national lockdown. Our team also notified that the online companies are hiring thousands of people to cater to the spike in demand amid lockdown.
The ET has reported now that the food delivery platform Zomato is in talks to buy the Softbank backed online grocery startup, Grofers.
The merger between the two entities will be a significant consolidation move in India’s consumer internet sector. The all-stock deal is expected to close at approximately $750M.
SoftBank, the Japanese Vision Fund, which has the largest stake in Grofers, may further invest around $100-200 million in the merged entity.
Uber, in which SoftBank has invested considerable amount had in February, sold its India food delivery business UberEats to Zomato.
In just a few months, this would be another significant acquisition by Zomato after Uber eats
In January this year, Zomato announced that it had secured $150M in fresh funding from Ant Financial, which is a subsidiary of Chinese firm Alibaba.
Zomato is currently valued at around $3.2 billion, while Grofers was at $650M in December 2019.
Zomato - Indian restaurant aggregator and food delivery startup
Founders - Deepinder Goyal, Pankaj Chaddah Founding Year – 2008 Location - DLF Phase V, Gurugram, India Website - https://www.zomato.com/ncr
In the Indian Online Grocery segment, the merged entity is going to give a fierce competition to BigBasket, which is one of the most prominent players in this segment. BigBasket had earlier explored the possibility of a potential merger with Grofers, but the talks failed. Even Amazon held some rounds of negotiations with BigBasket, but that could not materialize.
