What Zomato's 10-minute food delivery model means for quick commerce sector

The model could propel the 'one-stop deliverer' concept

32-Zomato-10-minute-delivery-model Dash to deliver: Zomato’s 10-minute delivery model was criticised for putting undue pressure on delivery executives, a charge denied by CEO Deepinder Goyal.

PUTTING THE ‘FAST’ in fast food is the flavour of the season. Recently, food aggregator giant Zomato launched a 10-minute food delivery service. For now, it is confined to Zomato’s affluent home base of Gurugram, but it plans to scale it to other cities soon.

“Nobody in the world has so far delivered hot and fresh food in under 10 minutes at scale and we were eager to be the first to create this category, globally,” said Deepinder Goyal, cofounder & CEO of Zomato.

The move to inject the white-hot business model of quick commerce into food delivery seems to have shaken up India’s burgeoning e-commerce space. Delivery of grocery and essential items within 10 minutes or so is already a thing, pioneered by startups like Zepto and Blinkit (formerly Grofers) and also by the likes of Reliance’s JioMart and Tata-owned bigbasket. Meanwhile, Zomato’s rival Swiggy, which already has a thriving instant grocery delivery model, is reportedly planning to extend it to food as well. And, Bhavish Aggarwal has also turned his attention to the model with Ola Dash.

But as one analyst quipped: are we counting our chicken biryanis even before the eggs are hatched?

“Is there a demand for food delivered within 10 minutes? I don’t think thousands of people wrote in saying that if you don’t deliver in 10 minutes, we will stop ordering,” said Rashmi Daga, founder of cloud kitchen chain FreshMenu. “Consumers need to be educated on the costs associated with demanding speed. We are just creating undue pressure on everyone around us.”

When Goyal announced Zomato’s 10-minute delivery model in a blog in March, it was criticised for putting delivery agents under undue stress and causing traffic problems.

“I will seriously question the quality of such food that can be cooked, packaged and delivered in 10 minutes, anybody would as well,” said restaurateur Rachel Goenka, head of the Mumbai chapter of the National Restaurant Association of India.

Goyal was obviously prepared for such reactions, and clarified, “We do not put pressure on the delivery partners to deliver food faster, nor do we penalise [them] for late deliveries. Time optimisation does not happen on the road, and does not put any lives at risk. The 30-minute average delivery time [presently] is too slow, and will soon have to become obsolete. If we don’t make it obsolete, someone else will.”

Therein lies a clue. The pandemic provided a growth opportunity like never before. But despite orders shooting up and commission rates varying between 18 per cent and 30 per cent, food aggregators soon realised that after the deep discounts, delivery costs and average low order value (less than Rs500), there was not much money to be made.

Enter quick commerce, as a value-add to incremental business. It is no coincidence that Zomato’s recent acquisition of Blinkit, a quick delivery platform for groceries, preceded the 10-minute food delivery announcement. Also, it had noticed Swiggy dashing past it in revenue in recent years after going beyond food delivery with InstaMart (essential items delivery) and Genie (courier).

“There is massive growth for quick commerce due to online penetration, and the multifold growth witnessed across tier 2 and tier 3 cities,” said Harsha Razdan, national leader (consumer markets, life sciences and internet business), KPMG in India. “Given the thin margins on deliveries, it is important for quick commerce companies to understand the complexity of operations and work on core levers driving efficiencies to be able to maximise benefits and provide timely, quality deliveries.”

Contrary to popular belief that a 10-minute delivery model involves food being re-heated or cooked quickly and sent out with delivery boys in a rush, the way it works is quite different. It involves targeting what companies call “high demand neighbourhoods”, essentially places with apartment complexes or affluent customers who order frequently as per their records, and setting up finishing stations in partnership with restaurants. Only selected dishes are offered in the 10-minute window, depending on popularity and possibilities of standardisation—a sandwich is easy to standardise, a lamb raan, not easily so.

Technology comes into play in a major way here, ranging from robotic machines like that of Bengaluru’s Mukunda Foods that can make anything from dosa to momos faster to data sets ranging from predictive analysis to logistics planning used to maximise efficiency and cut the time taken. “[Having] finishing stations 1-2km away from [the customer means] delivery partners have to travel just 3 to 6 minutes at a nominal bike speed of 15-20km. Our delivery partners actually have to travel shorter, defined routes for this,” said Rinshul Chandra, Zomato’s vice president who is leading the 10-minute food delivery project.

Zomato obviously is hoping the 10-minute model will be a double-engine booster. The best-case scenario is that this experiment will give it a more efficient model of finishing stores and shorter delivery cycles, leading to more orders and hence more revenue. Also, along with Blinkit, it can find synergies between food delivery and grocery delivery, a bus it has missed so far where others are making hay.

Like Zepto, founded by two Mumbai teenagers just after the pandemic and which jolted the market with its 10-minute delivery proposition. “At a time when other grocers were delivering in four-five days, we experimented with rapid deliveries—45 minutes, 30 minutes and then 10 minutes. The reaction we got from customers, retention rates and other scores just shot up post the 15-minute mark,” said founder and CEO Aadit Palicha. “People get excited with the 10-minute bit, but what really drives repeat usage is a high degree of accessibility and convenience. Ten minutes is a sort of representation of that—the reliability of it all.”

The bigger goal with this model, however, would be to be a ‘one-stop deliverer’ for all things essential. The recent unveiling of super apps like Tata Neu and JioMart stand testimony to this.

Yet, for a country where the quickest food option for long was getting pizza at ‘30 minutes or free’, the new offering has a chance to upend many habits. A recent RedSeer report said India is ahead of other leading markets (including China) when it comes to quick commerce adoption, and it could be a market worth more than Rs4 lakh crore in three years time.

Fast or slow, the proof of the pudding is finally in the eating.