Zomato Shuts Down ‘Xtreme’ Delivery Service, Relaunches ‘Legends’ Amid Market Challenges

Zomato has recently made significant changes to its delivery service offerings. On July 4, 2024, the company announced the discontinuation of its hyperlocal delivery service, ‘Xtreme,’ due to low demand. At the same time, Zomato relaunched its intercity food delivery service, ‘Legends,’ but with a new minimum order requirement of Rs 5,000. This shift reflects the company’s ongoing efforts to find the right product-market fit in a competitive landscape.

Zomato’s Strategic Shift in Delivery Services

Background of the Changes

Zomato, a leader in the food delivery industry, has been experimenting with various services to enhance its market presence. The ‘Xtreme’ service was launched in October 2023, aiming to provide hyperlocal delivery for small packages across nearly all cities where Zomato operates. However, the service struggled to gain traction, leading to its suspension just months after launch.

A Zomato executive described ‘Xtreme’ as an experiment that ultimately did not meet expectations. The service aimed to leverage Zomato’s extensive delivery network to cater to both small and large merchants. Despite its ambitious goals, it failed to resonate with consumers, prompting Zomato to remove the ‘Xtreme’ app from the Google Play Store.

Relaunching ‘Legends’

In contrast, Zomato has reintroduced its ‘Legends’ service, which allows customers to order food from renowned restaurants in different cities. This service initially launched in 2022 but faced challenges that led to its suspension in April 2024. The company has now revamped ‘Legends’ by returning to direct deliveries from restaurants instead of relying on pre-stocked items, which had previously disappointed customers.

The new ‘Legends’ service comes with a significant change: a minimum order value of Rs 5,000. This requirement aims to ensure profitability per delivery, but it may limit accessibility for budget-conscious customers. Currently, ‘Legends’ is available in select cities, including Delhi-NCR and Bengaluru, with plans for further expansion.

Understanding the Market Dynamics

Consumer Demand and Legal Challenges

The decision to halt ‘Xtreme’ and relaunch ‘Legends’ highlights Zomato’s response to market demands and legal challenges. The original ‘Legends’ service faced scrutiny when a Delhi resident filed a case against the company for not delivering as promised. Instead of delivering food from famous restaurants, Zomato had been sending pre-stocked items from local warehouses. This legal issue contributed to the service’s suspension earlier this year.

As Zomato navigates these challenges, it is clear that consumer preferences play a crucial role in shaping its service offerings. The company has acknowledged the need for a better product-market fit, which has led to the recent changes in its delivery services.

Future Prospects

Looking ahead, Zomato’s strategy appears focused on refining its service offerings to better align with consumer expectations. The relaunch of ‘Legends’ with a higher minimum order value indicates a shift towards catering to a more premium market segment. This approach may help Zomato improve its profitability while still providing a unique dining experience for customers seeking iconic dishes from various cities.

Moreover, the company’s willingness to experiment with new services, like the now-defunct ‘Xtreme,’ showcases its commitment to innovation. Zomato continues to explore various avenues for growth, including potential partnerships and expansions into new markets.