Zomato’s 10-Minute Food Delivery Service, Deconstructed
There’s a popular-yet-unfortunate joke about India being a country where pizza arrives faster than an ambulance. Soon, pizza may arrive faster than you can fold one load of laundry.
As great as it is to see tech-enabled consumerism reaching new highs in the decade, the 10-minute food delivery service comes with many reservations and questions. For one thing, Zomato isn’t the first one to offer this service in the country (Grofers, Zeptho and Swiggy have offered it earlier too). In fact, Grofers literally rebranded itself to “Blinkit” to emphasise that it delivers groceries in the blink of an eye.
But that was about delivering groceries. Zomato is about delivering food, even though one can assume that the 10-minute delivery bug may have bitten the company post its recent investment and planned acquisition of Blinkit.
But what is it about this business model that is so lucrative but has drawn so much criticism at the same time?
The Quick Commerce Manual
Q-Commerce is a sub-vertical of e-commerce that has garnered considerable demand in recent years due to its superfast modus operandi. The idea that time is value and 10 minutes is a necessity in today’s fast-paced life lies central to the market that operates and benefits from Q-commerce models.
Let’s do a few case studies. Swiggy, Zomato’s most-impressionable industry rival, tried a 15-minute food delivery experiment by partnering with cloud kitchen operators like Eatongo and Brekkie. But very soon it was faced with challenges in unit economics and limitations in serving hot and fresh food in such a limited time frame.
Next came Ola Cafe, the food delivery business started by Ola. In this case, the company partnered with a selective range of restaurants, drivers, fixed time slots and limited menu to offer a 10-minute delivery service in a very specified area. However, the same issues in scalability emerged as they did with Swiggy and Ola Cafe shut down in less than a year.
Following this, there has been a sudden swell of instant delivery offers from the industry with multiple players — Big Basket, Blinkit, Swiggy Instamart and Zeptho — promising 10-minute or more delivery windows for groceries. Most of these operate on a “dark store model” which means they have dedicated kitchens (like ghost kitchens) which aren’t open to the public for in-store purchases but are created to exclusively fulfil online purchases.
Zomato plans on following a similar model. Here’s how.
Rendering a 10-minute Model
The first task would be to decide a menu. One needs to remember that Zomato, based on its 14-year-old operation, has amassed a gold mine of data on what kind of food largely sells from which restaurant in which areas by which customers. This will enable the company to make a curated menu of, say, 20–30 items in each of their dark stores which Deepinder Goyal (Founder and CEO of Zomato) calls “finishing stations”.
If you’re wondering if this menu will include only food items which are frozen or easy to assemble, then you are right. The idea is to to shrink kitchen preparation time to 2–4 minutes by using limited, fast-selling and predictable menus to deliver within a 1–2 km radius. Essentially, your food is almost ready before you even order.
Next stop — managing logistics. This is where Zomato’s partnership with Blinkit will come in handy. For a company which clocks nearly 1.25 lakh orders on a daily basis, managing a network of riders and delivery vehicles to reach customers’ destination is a built-in feature ready for use.
Having said that, there is still the issue of time management. Even if one has a large pool of personnel to employ for deliveries, a 10-minute window is cutting it too close, especially in large cities with insurmountable road traffic. This is the crux of the criticism that Zomato is facing over its announcement because the novelty of a business enterprise rarely outweighs the risk to employees’ lives.
The CEO says that “time optimisation doesn’t happen on the road”. But when your unique selling point focuses entirely on the optimisation of time, the urgency of the deadline tends to be spread across all the business horizontals, be it source fulfilment or the delivery process. So, even if Zomato plans not to penalise its delivery partners for late deliveries, there ought to be an innate obligation on them (possibly even through incentives) to ensure prompt deliveries which ultimately jeopardises their road safety.
Still… It Has Been Done Before, Right?
That’s true. Domino’s was the earliest to start the trend with its offer of 30-minute pizza delivery which continues to this day due to its massive popularity and acceptance.
So, the question is, why is the world not as welcoming to Zomato’s offer?
First of all, a 30-minute window is thrice the optimisation timeframe that Zomato has chosen. Secondly, Domino’s generally uses its own employees for making deliveries unlike Zomato which relies on gig workers who may or may not be working for other platforms too. This creates a differential in terms of deadline commitment.
Additionally, the demand and response towards a pizza in under 30 minutes has been overwhelming unlike the demand for food in under 10 minutes. When you say food, it doesn’t just include fast food but also itemised cuisines which could take several condiments as well as minutes to prepare.
The point is, one cannot promise a 10-minute food delivery goal without triggering an assumption that the food will be undercooked. The underlying belief is that no one can cook and serve food in under 10 minutes, unless there is a considerable compromise in quality. Even if a frozen food/ready-to-cook menu can combat the quality component to a certain extent, it cannot guarantee freshness. And any business which chooses convenience over freshness is likely to draw the flak of an increasingly quality-conscious consumer class.
So, even if Zomato battles it out within the optimisation side of things, it would be hard for the company to maintain the scalability of its new promise without implementing a considerable degree of automation. To that end, Zomato has been investing more in the food robotics segment which could lend a hand in automating food preparation for restaurants. But it’s hard to say if and when a process like that might be feasible, especially when the launch happened without even running a pilot scheme.
The giant addressable opportunity for the quick commerce market (close to $45bn) in India presents ample opportunity for growth. So, if Zomato really wishes to capitalise on this, it needs to do a lot more than throw around words like “demand prediction algorithms” and “future-ready robotics”. Unless of course, this is all part of a huge marketing gimmick in the run up to its acquisition of Blinkit, whose business somewhat relies on the clickbait-i-ness of the 10-minute delivery module.
But let’s not forget that Zomato did make meaningful cash investments of up to $225m last year across Blinkit, Shiprocket and Magicpin — all aimed towards leveraging the quick e-commerce space in India. It also invested $5m in UrbanPiper which is essentially a tech infrastructure layer that helps restaurants become “food delivery-ready”. All these point towards a long-term bullish view in the sector.
It takes 30 seconds just to type out the sentence which lists all the variables governing the business of online food delivery — preparation, kitchen competency, packaging, logistics, tech interface, navigation, traffic, rider efficiency, hygiene standards etc. Let’s see if Zomato manages to tick every single one of those boxes in the remaining nine minutes and 30 seconds.
(Originally published March 23rd 2022 in the TRANSFIN E-O-D Newsletter)
