How did Zomato hit on 'Instant', the 10-minute food delivery model?
Customers are increasingly demanding a quicker response to all their needs. Nobody wants to plan; nobody wants to wait.
From any tech industry standpoint, innovating and leading from the front is the only way to survive. If we had not done it, somebody else would have! So we thought, why don’t we take the lead on this? We started working on it the last couple of months.
So how does the model work?
We are not bulk-buying anything from restaurant partners; they work closely with us. Let me explain the modus operandi. Food delivery has two major components—item preparation, which happens in the kitchen, and then delivery to the customer. To deliver to a customer [faster], we needed to optimise both of these legs. The quick delivery promise relies on a network of dense finishing stations, which are located in close proximity to high-demand customer neighbourhoods.
And on the preparation side, it lies with the restaurant partners. We are working with just 20 to 30 of the top-selling items, which can be standardised. Basically, we have created a supply chain and logistics and warehousing network that restaurant partners are leveraging, and we are selling these items with a hyper-local reference standpoint.
So these items are already in your finishing station and once an order comes, you re-heat it and send it across to the nearby apartment?
No, that is not how it works! I will not be able to share all details with you, but I can tell you a lot of backend work goes into this. We have robust dish-level prediction algorithms and in-station robotics, which helps in ensuring that the food is high in quality and freshness.
So a finishing station is like a cloud kitchen?
These are not kitchens. These are finishing stations; the restaurants are also involved here. They are co-owned between restaurant partners where they also come in, put in their inventory [while] we give them warehousing and supply chain logistics services. Food is prepared by the restaurants. There are a lot of demand prediction algorithms, which we have built for our traditional businesses that we are leveraging for this [and] a lot of data sciences [that] we have been able to build over the past few years.
Is an order that is delivered in 10 minutes charged extra?
We are not yet charging anything extra from our customers. We expect ‘Instant’ to create a significant impact for all our customers on all our three tenets—accessibility, quality and affordability. We believe that eventually this will lead to economies of scale kicking in and reduction in end prices to customers.
The loudest complaints have been over how delivery executives will be exploited and how this could even lead to a traffic issue.
Quick delivery promise lies on finishing stations, which are literally 1-2km away from you. That means our 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!
Also, not just for ‘Instant’ but for our overall ordering business, delivery [executives] are never informed of the delivery time, so they have no pressure, no penalties or no incentive for delivering on time.
How does this work as a business model? Does it involve extra expense? Or, does it involve cost savings?
We are trying to build the future of this business. It is a long-term strategy.
What has been the response so far?
It has been more positive than we expected. Having said that, we have a long road ahead. And, we are actively working on getting more people to try out this new value proposition.