Xtreme by Zomato: A Game-Changer for Small and Medium-Sized Businesses in India’s Logistics Sector

Zomato, a leading food delivery company in India, has expanded its services with the introduction of ‘Xtreme’, a new intra-city logistics service. This venture marks a strategic shift for Zomato, moving beyond its core business of food delivery to address the growing logistics needs of merchants. Xtreme is designed to streamline parcel deliveries for merchants across cities, offering a comprehensive solution for intra-city deliveries.

Key Features of Xtreme

  1. Target Audience and Delivery Scope: Xtreme is aimed at both small and large businesses, facilitating the intracity delivery of small packages. It can handle a wide range of products, including documents, medicines, food, groceries, apparel, cosmetics, and more, with parcels weighing up to 10 kg.
  2. Service Availability: The service is already operational in nearly 750-800 cities where Zomato offers food delivery and is accessible through a separate application.
  3. Delivery Network: Xtreme leverages Zomato’s extensive fleet of over 3 lakh two-wheeler delivery executives, which significantly aids in its delivery capabilities.
  4. Features for Merchants: The service includes features like real-time tracking, efficient route optimization, and a user-friendly interface, all designed to meet merchants’ specific needs.
  5. Pricing Structure: Zomato charges an initial fee of Rs 25 for the first kilometer of delivery, with incremental increases for additional kilometers. It’s important to note that this pricing does not include Goods and Services Tax (GST).

Strategic Significance

  • Diversification and Revenue Streams: Zomato’s entry into logistics is seen as an effort to diversify its revenue sources and reduce dependence on its food delivery segment. This move also aligns with the substantial growth observed in the Indian logistics industry, fueled by the e-commerce boom and changing consumer behaviors.
  • Advantages of Existing Infrastructure: Zomato’s existing delivery infrastructure, developed through its food delivery services, offers a competitive edge, allowing a smooth transition into the broader logistics domain.
  • Market Positioning: The launch of Xtreme is particularly timely, given the increased demand for reliable delivery services during the COVID-19 pandemic. Zomato is positioned to address this need, offering businesses a dependable delivery partner.

Competitive Landscape and Challenges

  • Competition: Xtreme faces competition from other popular operators in the hyperlocal delivery space, such as Dunzo, Swiggy, Uber, and Ola.
  • Challenges in Larger Cities: In larger cities, where time-sensitive deliveries are crucial, Zomato might face challenges, as customers may prefer faster delivery options.

Financial Performance and Outlook

  • Recent Financial Success: Zomato has reported a net profit of Rs 2 crore for the quarter ending in June 2023, a significant improvement from the Rs 186 crore loss the previous year.
  • Delivery Executive Fleet: As of the end of the fiscal year 2023, Zomato had an active delivery executive fleet of 3.26 lakh, indicating substantial resources for its hyperlocal delivery ambitions​​​​​​​​.

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