Food delivery giant Zomato Ltd has abandoned plans to diversify into delivering groceries for the second time in two years, citing infrastructure gaps during a highly competitive online grocery market.

In a letter to its grocery partners on Friday, Zomato said, “Over the last two months of operations, we’ve had a couple of important realizations. Store catalogues are very dynamic, and inventory levels change frequently. This has led to gaps so as fulfilment, resulting in poor customer experience.”

“In an equivalent period, the express delivery model with under 15-minute delivery promise and near-perfect fulfilment rates has been getting tons of traction with customers and expanding rapidly. we’ve realized that it’s extremely difficult to tug off such a model with high fulfilment rates consistently during a marketplace model (like ours),” Zomato said within the letter, a replica of which has been reviewed by Mint.

Zomato first dabbled with the e-grocery category in April last year during a bid to take advantage of a surge in demand for e-groceries during the primary wave of the pandemic. It recently announced plans to restart grocery offerings on its app and commenced pilots in Delhi-NCR in August.

“We have decided to shut our grocery pilot and, as of now, haven’t any plans to run the other sort of grocery delivery,” a spokesperson for Zomato said on Sunday in response to emailed queries from Mint.

“Grofers has found high-quality product-market slot in 10-minute grocery, and that we believe our investment within the company will generate better outcomes for our shareholders than our in-house grocery effort,” the spokesperson said.

Zomato recently invested $100 million in e-grocery unicorn Grofers and its wholesale unit Hands on Trades Pvt. Ltd, which also pivoted to the under 10-minute-delivery model. Zomato holds 9.3% each in Grofers and Hands on Trade.

Zomato will still operate its business-to-business (B2B) essentials and grocery delivery services for restaurants through its Hyperpure vertical, the spokesperson added.

Zomato’s shift in strategy comes at a time when its arch-rival Swiggy is ramping up its grocery and essentials service, Instamart, in Delhi-NCR also as in Mumbai, Hyderabad and Chennai. Instamart, which started in August 2020, also features a strong presence in Swiggy’s home market of Bengaluru.

Instamart continues to make ‘dark stores’ or those which take only online orders with partners to possess more control over their grocery inventory, because it begins 15- to 30-minute deliveries on the platform.

While announcing its maiden quarterly results as a listed firm, Zomato said losses for its Hyperpure business expanded within the June quarter thanks to investments made in growing the business.