Zomato Plans to Relaunch ‘Xtreme’ With a Revamped Strategy After Initial Setback

After suspending its logistics venture ‘Xtreme’ earlier this year due to low demand, foodtech giant Zomato is reportedly gearing up to reintroduce the service with a revised strategy. According to reports, the company is recalibrating its approach to make Xtreme more aligned with its core food delivery strengths.

Zomato Plans to Relaunch ‘Xtreme’ With a Revamped Strategy After Initial Setbac

Insights from Industry Sources

A source familiar with the matter shared insights, stating, “The service is being tweaked to focus on the core food delivery strength of the company…there are several restaurants that deliver directly. This may still be an experiment that the company may or may not scale.”

Initial Launch and Subsequent Suspension

Zomato’s Xtreme was initially launched in October 2023 as a quick parcel delivery service aimed at merchants, marking the company’s entry into the logistics space. The service was designed to function through an independent application, separate from Zomato’s main food delivery app.

However, despite initial excitement, Xtreme failed to generate substantial demand and was shut down in July 2024. Following this decision, the Xtreme app was removed from the Google Play Store. Existing users who try to access the app are greeted with the message that their location is not serviceable.

Challenges Faced by Xtreme

One of the key issues that led to Xtreme’s suspension was the limited scale of its operations. Another insider shared, “There are several restaurants across cities who want to maintain their own channels for ordering but want the quality of last-mile delivery that Zomato offers… in the earlier experiment, too, the scale never became so big that it would affect the company’s food delivery services for its restaurant partners but if it ends up achieving a certain scale, it will take a call accordingly.”

Diversifying Service Offerings

This potential relaunch of Xtreme is not Zomato’s only recent attempt to diversify its services. In July 2024, Zomato also attempted to revive its intercity food delivery business, Legends. However, Legends was also suspended only a month after its relaunch due to insufficient customer interest. Zomato’s decision to pause these ventures is part of a broader strategy to experiment with new offerings within the food delivery space and discontinue those that do not gain enough traction.

Exploring Multiple Business Avenues

Beyond its food delivery focus, Zomato has been exploring multiple business avenues this year. These include areas such as logistics, entertainment, last-mile delivery services, and large order fleet management. In late August 2024, Zomato made headlines by acquiring Paytm’s events and movie ticketing subsidiaries, Wasteland Entertainment Private Limited and Orbgen Technologies Private Limited, for a whopping INR 2,048 crore in an all-cash deal. This acquisition signals Zomato’s intention to expand its footprint beyond the foodtech space.

Conclusion

Zomato's decision to relaunch its logistics service, Xtreme, marks a pivotal moment in the company's ongoing efforts to innovate and adapt within the competitive foodtech landscape. After facing challenges that led to the initial suspension of Xtreme, Zomato is recalibrating its strategy to align more closely with its core competencies in food delivery.

By focusing on the needs of restaurant partners seeking reliable last-mile delivery solutions, Zomato aims to create a service that adds value while minimizing the risks associated with previous ventures.

As Zomato continues to explore various business avenues, including intercity delivery and entertainment acquisitions, its approach reflects a broader commitment to refining its offerings based on market demand and user feedback. The company’s ability to pivot and experiment will be crucial as it seeks to enhance customer experiences and maintain its competitive edge.

With significant investments in innovation and a keen eye on emerging trends, Zomato is positioning itself not just as a food delivery service but as a comprehensive player in the logistics and foodtech sectors. The industry will be closely watching how these changes unfold, as the success of Xtreme could potentially redefine Zomato's role in the logistics space and contribute to its overall growth strategy.