Zomato to shut grocery service and invest in Grofers - Here's why

Food tech giant Zomato has decided to scrap its grocery delivery service for the second time amid growing competition in the segment with Swiggy doing the same. 

This came after the company decided to invest in Grofers - a giant of grocery delivery that will help Zomato generate better outcomes than its in-house grocery effort.

The move was informed to its partners via email that the company plans to stop its pilot service with effect from September 17. "We have decided to shut down our grocery pilot and as of now, have no plans to run any other form of grocery delivery on our platform," a Zomato spokesperson said.

They further added, "Grofers has found high-quality product-market fit in 10-minute grocery and we believe our investment in the company will generate better outcomes for our shareholders than our in-house grocery effort."

Zomato recently released its IPO which saw huge numbers and had started offering grocery delivery service in select markets within 45 minutes to its customers. Last month, the Competition Commission of India (CCI) approved the proposed acquisition of a 9.3 per cent stake in e-grocer Grofers by Zomato.

The acquisition involves an investment of $100 million by Zomato in the online grocer.