Hype to hiccup: Here's what the industry said about Zomato's veg-only delivery fleet

While the colour, the main differentiator, was rolled back, Zomato will continue to offer the veg-only service; just that users will not be able to tell the difference from outside.

Delivery partners who are part of this fleet will pick up food from restaurants that serve just veg food.  Other eateries, like pure non-veg places and outlets that serve both veg and non-veg, will be excluded under this service.

“...despite everyone's best efforts, sometimes the food spills into the delivery boxes. In those cases, the smell of the previous order travels to the next order, and may lead to the next order smelling of the previous order. For this reason, we had to separate the fleet for veg orders,” Goyal had said on March 19 while explaining the need of the feature.

Sanjeev Bikhchandani, Founder and Vice Chairman, Info Edge India Ltd, an early investor in Zomato, hailed the decision to take a U-turn. "Good move. Smart management teams and companies listen to feedback and find better answers. No ego," Bikhchandani said on X.

Marketing gimmick

Industry executives said Zomato’s latest move was only to create hype on social media and is impractical to roll out and sustain in the long-term.

“A delivery fleet has to be liquid and pick ups need to be planned based on the availability of delivery executives. You cannot delay an order pickup just because you have no green tee-shirt partner available in the vicinity. This is an announcement that will create a buzz on social media and eventually fizzle out,” an industry executive said.

Out of the total base that orders food online, only about 30 percent of them are vegetarians and most of them have had no issue so far, so why the need to suddenly launch it, the executive questioned. Of the 30 percent, sub 2 percent want their food to be handled separately from non-veg. This cohort is usually the people who are older than 60 years and are not on food delivery apps, an executive explained.

At least three other companies that deliver food told Moneycontrol that they have never received such requests from customers.

Restaurateurs however welcomed the move, but await more details. “The idea is promising, but we need to assess potential complexities and logistical challenges. We must ensure that delivery workers receive sufficient orders, and evaluate the sustainability of this model," PC Rao, President of Bruhat Bangalore Hotels Association, said.

“Only thing is the delivery costs shouldn’t go up.”

Past patterns

This is not the first time Zomato has created a stir on social media with a new launch. It recently said its women delivery partners will be allowed to wear kurtas and deliver food but the adoption has been low, according to industry observers.

Even on a longer time horizon, Zomato has scaled back on some offerings that were a hit on social media. On-time guarantee (OTG) benefits is a case in point.

Zomato Gold members, the company’s loyal customer base, who renewed their membership after a particular period were no longer offered OTG benefits. Under the scheme, customers were given a coupon if their food did not reach within the promised time.

The company has slowly but fully done away with the offering as it was impacting its financial health.

Similarly, Zomato has scaled back on Intercity Legends by limiting the number of restaurants one can order from in certain cities. The company has even tweaked delivery options. In multiple regions, like Kolkata for instance, the offering is unavailable during multiple times of the day. Through Intercity Legends, a user can order food from one city to another.

A company insider said Intercity Legends is only a “young business” and is going through multiple iterations to be in its best form eventually.

Testing waters

An investor in the space said Zomato’s move was largely to grab eyeballs but over a longer period of time, it is creating a habit that it will hope to monetise.

“See, if the veg-only fleet works out, Zomato can eventually ask customers to pay a premium because the offering is special and differentiated. And the additional amount makes sense because Zomato’s cost to deliver from a dedicated fleet is bound to increase,” the investor said.

Over a longer timeframe, Zomato may even start creating specialised delivery fleets that are dedicated to particular products and look at monetising them separately.

In fact, CEO Goyal said that in the future, he plans to add more specialised fleets for special customer needs. “For example, there's a special cake delivery fleet coming up with hydraulic balancers which prevent your cake from getting smudged during delivery,” he posted on X on March 19.

Zomato can eventually ask customers to pay extra if they want their cake to be delivered via the dedicated cake delivery fleet. If a customer doesn’t opt for specialised delivery, the company delivers the regular way, it will say ‘this is the best we can do under the current arrangement. If you want better delivery, opt for the cake only fleet’ – the investor cited above said.

“Customers will be willing to pay for a special service if it means their delivery will be flawless. So, with the latest launch, Zomato is only testing waters and if it sees positives, it will run dedicated fleets for several other products and pass on the higher cost to customers,” the investor concluded.