Zomato has recently launched “Xtreme,” a hyperlocal delivery service designed to harness its massive two-wheeler fleet of over 3 lakh delivery executives. Sources indicate that this service has been rolled out across nearly 750–800 cities where Zomato offers food delivery and is accessible through a dedicated app.
Xtreme, introduced late last month, is geared towards catering to both small and large merchants for the intra-city delivery of small packages, mirroring services offered by industry players like Shadowfax, Porter, and Loadshare. While Xtreme primarily targets merchants and businesses, it has also opened its doors to individual users, positioning itself in competition with the likes of Dunzo, Swiggy, Uber, and Ola.
With Xtreme, users can conveniently ship small parcels, including items such as documents, medicines, groceries, apparel, cosmetics, and more, with a maximum weight of up to 10 kg, as detailed in the Xtreme app.
According to insiders, Zomato is charging Rs 25 for the first kilometre of delivery, with tariffs increasing with each additional kilometer. This pricing structure does not include the goods and services tax (GST) component.
Zomato has refrained from providing official comments on this development.
Market analysts suggest that this move could create new revenue-generating avenues by leveraging Zomato’s well-established, highly trained delivery workforce. As one Mumbai-based consumer internet analyst pointed out, “The intracity logistics space for small parcels is wide open now with the crisis at Dunzo.”
For Zomato, the venture into Xtreme hyperlocal deliveries comes following its impressive financial performance, with the company reporting a maiden consolidated net profit of Rs 2 crore for the quarter ending in June 2023, compared to a loss of Rs 186 crore the previous year. This turnaround is attributed to increased order frequencies driven by Zomato’s loyalty program, Gold, and a nearly 71% year-on-year revenue growth, reaching Rs 2,416 crore in the same quarter.
As of the end of the fiscal year 2023, Zomato boasts a robust fleet of 3.26 lakh active delivery executives.
Zomato’s entry into the hyperlocal delivery space coincides with the challenges faced by one of the key players in the sector, Dunzo, which is backed by Reliance Retail. The slowing pace of Dunzo’s operations has prompted SoftBank-backed Ola to venture into hyperlocal deliveries. Ola launched its Ola Parcel pick-up and drop service on October 6, supported by its fleet of electric two-wheelers in Bengaluru, offering competitive tariffs.
Zomato’s extensive presence across numerous cities is expected to work in its favour, particularly in locations where the market is substantial for food deliveries. However, in larger cities heavily reliant on fast deliveries, the competition could be fierce, as customers may prioritize quicker service when ordering food online during peak times.