Zomato on Wednesday announced that it has completed its acquisition of food delivery service Runnr, adding over 1,500 people. Runnr was originally known as Roadrunnr, and offered B2B services for hyperlocal deliveries - this grew slowly, and last year, Roadrunnr acquired troubled food delivery service TinyOwl, and changed its name to Runnr, through which you could order food and track delivery, much like with Swiggy.
With the Zomato acquisition, Runnr's run comes to an end, but the former is going to use Runnr's logistics to offer delivery services to restaurants, complete with live order tracking, to catch up to the feature that Swiggy popularised in India.
Describing Zomato as an amalgam of many companies (online ordering, point of sales, infrastructure services, advertising, etc.), founder and CEO Deepinder Goyal wrote in a blog post that it provided Runnr with the tools needed to build its business while being aligned with Zomato's larger mission.
"For us at Zomato, we saw that we were going to be working with a team of extremely driven individuals who had figured out how to solve for a vital piece of our puzzle—the one that affects our user delight: logistics," Goyal wrote.
This is contrary to his earlier position that handling delivery logistics is not a cost-efficient business, and that's something Goyal also addressed in the blog post. "For the record, we have always maintained that the most cost-efficient delivery fleet is the restaurant’s own, where they can utilise the same staff during off-peak hours for back-of-house and marketing activities. That belief is still intact," he wrote. "Keeping that in mind, Runnr will continue to function as an independent logistics company (owned by Zomato) offering the full stack of logistical services to players other than Zomato as well - e.g. pharma, grocery, e-commerce, and so on."
In other words, Runnr will continue to try and grow its B2B business, while also servicing Zomato. However, at the time of the Tiny Owl acquisition, the company had mentioned that around 95 percent of its B2B business was from food, so the other delivery services likely remain a small part of the company, particularly given the increased focus on food since 2016. Also, funnily enough, on Reddit, Goyal had written two years ago that he would not acquire TinyOwl, because "don't like the name"; since Runnr acquired Tiny Owl and Zomato acquired Runnr, it looks like he did end up acquiring the company, yet losing the name.
Going forward, this will mean that one of Swiggy's big plus points - being able to track your order in real time - is taken away. Zomato isn't the only competition that the company will have to face either - Uber launched Uber Eats in Mumbai, then expanded the service to Delhi. It is now testing the deliveries in Bengaluru as well. Like Swiggy (and now some Zomato orders), Uber Eats also provides live order tracking. The competition is food delivery appears to be heating up again, though the question of efficiency that Goyal mentioned remains to be answered for now, for all the companies.
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