Overview
Indians are primarily known for celebrating every small occasion and we all are proud foodies! But, in the age of technology and our busy lives, it is also impossible to imagine living without ordering our favorite meals, maybe once in a while from our favorite restaurants. Food delivery Platforms are quite a rage in India and are not expected to go out of business any time soon. Besides, the Indian food and beverage industry has huge growth prospects in the future. It was valued at USD 33.22 billion in 2020 and is expected to reach USD 156.25 billion by 2026, leading to a CAGR of 29.88% during the period. Accordingly, it could be understood that the food business is a large scalable business in India and making it online (as in the case of Uber) has hugely benefitted consumers saving them from the hassles to call or inquiry menu or price comparisons regarding the food menu and restaurants from making additional expenses in advertising their food or menu for its customers.
Zomato is an online food delivery platform that doesn’t need an introduction. It is an on-demand food delivery restaurant aggregator platform that helps its customers to discover the best food places with its complete food menu list and pricing including reviews so that a customer could get the best food at affordable prices delivered to him/her at his doorstep. It is one of the comprehensive and user-friendly applications that allow people to search for nearby restaurants and eateries to place orders for food delivery and get it delivered at their doorstep in no time. Not only this, but Zomato also allows accurate information such as restaurant menu, product reviews, and ratings based on orders made, so that customers could order lip-smacking food at their homes. Being a premier business venture in the Indian food start-up ecosystem, it has gained quite a popularity across the Indian countryside and has ventured into international markets too. It was founded in the year 2008, by its two co-founders Deepinder Goyal & Pankaj Chaddah under its parent company, Zomato Media Private Limited, and has its headquarters in Gurugram, Haryana.
Zomato – Mission and Vision
Zomato’s popular taglines include –“Never have a bad meal” and “Har Customer Star Hai!”, which indicates two things – Zomato’s ultimate mission to ensure that “No one gets bad food in taste or quality, and secondly, it is a customer-oriented platform and every customer is a priority for them. Accordingly, Zomato aims to become the “Largest Global food delivery platform” and offer food delivery services to anyone looking for food locally. To make Zomato a homely, something simple to remember and eliminate any kind of confusion, the founders decide to change its previous name and made it “Zomato” from Foodiebay. Despite its popularity in the food & beverage industry, it has a lot of its direct & indirect competitors such as Swiggy, DoorDash, Grubhub Inc., Deliveroo, Postmates, and ChowNow.
How does the Zomato business work?
Dealing the problem of hours of hassle to find the best quality affordable food with a lesser waiting period, Zomato has entered strategic partnerships with restaurants, cafes, and eateries in the selected cities of India and provides for the listing of delivery partners who provide food delivery services to the ultimate customers within the prescribed time.
Incorporated in 2008, Zomato is present in 525 cities in India, with 3,89,932 active restaurant listings along with a presence in 23 countries outside India. As of July 2021, the total valuation of the start-up is around $8 billion making it a unicorn start-up among the 42 Indian unicorn start-ups in 2021.
How was Zomato founded?
Zomato was founded by Deepinder Goyal and Pankaj Chaddah, an alumnus of IIT Delhi, who were both working for Bain& Company at that time. Deepinder Goyal observed that it was a tedious process for him & his colleagues to be tired of the crumbling food menu cards while standing in the long queues to access outside their office pantry, during the lunch hours. They felt that the problem was genuine and was on a larger scale, especially for people working in corporate jobs. That’s when the idea of launching an online platform took birth and they started to set up an intra-office online platform named “Foodiebay” and started digitizing food menu and contacts related data in early 2008. The business was instantly a hit-off and met tremendous success. In a matter of just nine months, Foodiebay became the largest restaurant directory in Delhi NCR and slowly started expanding to other cities like Mumbai, etc. After two successful years, the founders decided to rebrand the brand name as “ Zomato “ and since then there was no looking back.
Now, Zomato has marked its strong presence in India and around 24 countries by striking partnerships with 1+ million restaurants globally and receiving around 1.25 million orders on daily basis. It has a large team of and enthusiastic team of food soldiers who periodically make visits to each listed restaurant and give assurance regarding the security of their data. The platform not only offers food delivery options but also allows the users to share food reviews, opinions and create food stories based on their experience, which helps them to serve customers better and more socially in their business.
Founders & Team
As provided above, Zomato was founded by two co-founders namely, Deepinder Goyal & Pankaj Chaddah in the year 2008. Deepinder Goyal, an alumnus of IIT Delhi, completed his graduation in engineering and worked for a brief period with Bain & Co. where he served as a Senior Associate Consultant for almost four years. Whereas Pankaj Chaddah completed his B.Tech in mechanical engineering and worked for around 3 years before joining Deepinder Goyal for Zomato business. But, in 2018 he resigned from his role in the business which he described as “the conscience keeper and a strong system during business upheavals” for ten years during the business. But, he still owns a 3.11% stake in the business.
Gaurav Gupta, who initially joined the business as the “Global-Head of the Advertising sales & Chief Operating Officer” for Zomato, later joined as a Co-founder of Zomato and remained so until his resignation in Sep 2021.
Zomato -Business Model
Zomato runs on a B2B as well as B2C business model primarily focusing on services like online food ordering, restaurant reservations and loyalty programs, consulting services, and a lot more. It works in the same manner as that of the Google search engine to its target customers looking to explore a wide range of foods and restaurants with mention of any specialty or popularity of the dish. It strives not only to connect people with their favorite food but at the same time also works with restaurants for enabling a sustainable eco-system and has over time managed to become one of the largest food aggregator platforms in the world.
The three elements of the Zomato business include- Affordability, Easy Accessibility, and Assortment of food products & beverages to enhance trust with an assurance of safety to its customers and continues to work on innovative ways to improve its business services and better serve its customers. Since the beginning, the company has not been restricted in its target market and has established its presence in Tier 2/3/4 markets apart from international locations across the world. Though its discount-happy ways have irked its vendor partners a little making it stand between controversies and change its ways, it has managed to run efficiently despite these problems.
Over time, Zomato has worked out its business model in two ways- expanding its business throughout all cities across the nation and at the same time exploring international markets and business diversification into different business segments for minimization of business risks. Some of Zomato’s business Subsidiaries include-
i. Zomato Hyper pure- E-retail for grocery shopping!
By tapping on the problems faced by restaurants to get pure raw material for their food business and the distrust faced by consumers on the quality of food, Zomato has launched its new business venture “Hyper pure”, a B2B business vertical that offers grocery and related items such as vegetables, fruits, poultry, groceries, meats, seafood to dairy and beverages sourcing directly from producers such as farmers, mills, fishermen, and processors to ensure consistency in the quality and safety in every product so delivered. Thus, Zomato hyper pure is an initiative towards offering and providing fresh and hygienic high-quality ingredients and food supplies from the primary producer to the end consumer.
ii. Zomato Payments- Digital payments Platform!
Next, Zomato entered into its fin-tech business venture in August 2021 namely, Zomato Payments Private Limited, which will be its wholly-owned subsidiary. It aims to establish its position as a payment aggregator in the fin-tech industry and offer services such as payment & settlements systems apart from the payment gateway services acting simultaneously as a payment solution for paying goods, services, and utility bills with the help of mobile phones.
iii. Zomaland- Grand Food & Entertainment Carnival!
Next, in line is the Zomato Zomaland Carnival, a flagship event hosted by Zomato for the first time in 2018 across multiple cities like Delhi, Bengaluru, and Mumbai. Back in 2018, it became a huge hit with more than 1Lakh visitors and has expanded to more than 10 cities in India. It intends to offer a whole host of services including food, music, and entertainment in the form of music, comedy, interactive installations, and carnival games, under an umbrella.
Zomato-Revenue Model
Thanks to the multiplicity of services and the diversified business segments, Zomato enjoys a steady flow of revenue that reached Rs. 2,604.7 Crore (in FY 20). Besides revenue from online food ordering, provided below are some of the major sources of revenue for Zomato-
i. Listing/Advertising of Restaurants/Eateries/Cafe
Zomato’s business started as a simple food listing platform and a restaurant directory online and received advertising fees from the restaurants that listed themselves on the platform. However, now it has other options such as home food delivery & restaurant reservations and gets commission fees from restaurants to be listed and placed prominently on the feed. Additionally, restaurants who wish to promote any special events or any offers could get themselves and their advertisement banners advertised on the feed that will improve their visibility and conversion from the Zomato customers.
ii. Revenues of Food Delivery
This is the primary source of revenue for Zomato comes from online food ordering & delivery on the platform which is charged by the start-up on a per order basis. Where it earns a delivery fee from the customer making an order on one side, it earns revenue from restaurants as commission for each delivery that is later split between the delivery partner and the company. However, this commission may vary from restaurant to restaurant depending upon the delivery or whether the restaurant delivers food through its vendor partners.
iii. Zomato Platform Subscriptions Programmes-
As part of its marketing strategy, Zomato has introduced various subscription programs for restaurants and consumers, it offered Zomato subscription programs which could be obtained by making a certain amount of payment. Availing to such a subscription program made the subscriber eligible to benefit from exclusive offers from Zomato.
Such subscription programs have led to a steady source of revenue for the business from sources such as subscription fees to access subscription fees for a particular program (i.e. Gold Loyalty). Restaurants also pay a monthly subscription fee for participating in such programs and for other features such as live tracking, branded tamper-proof food packaging, etc.
iv. Fee for Participation in Zealand Festival-
Thanks to the Zomaland live advent featured by Zomato in the year 2018, it has resulted in an additional source of revenue for Zomato as the business charges an entry fee for participation in the event. The live event offers services like food & beverages, music, and entertainment for the audiences in more than 10 cities like Delhi, Kolkata, Bangalore, Chandigarh, Pune, etc. in India witnessing 1Lakh+ happy customers.
v. White Label Subscription Fee
Zomato White label Apps is an online plug-play platform that is aimed to digitize and improve a restaurant’s digital identity, making it more visible and helping them to focus on their core business by taking care of everything else. Before this, most of the food businesses were lacking a digital presence and weren’t able to harness the power & distribution of the internet to grow their business. Thus, restaurants and food businesses pay a subscription fee for availing multiple services such as targeted push notifications, real-time information and menu management, and marketing tools and other ancillary services that come with it such as Online Ordering, Table Reservations (NexTable acquisition), in-app Cashless payments, Loyalty programs, and Zomato Base (point of sales system) program.
vi. Revenue from Zomato Kitchens
To offer kitchen infrastructure services to the restaurant businesses, Zomato works with the entrepreneurs to start & operate Zomato Kitchens under different brands by offering consultancy services to entrepreneurs helping them to make the right choices and helping them to earn a steady flow of revenue per month ranging anywhere between 2 Lakh to INR 4 Lakhs per month and has successfully managed to run more than 180+ affiliate kitchens already up and running.
Zomato- Funding, Acquisitions, and Financials
Zomato has till date raised $2.1 billion in funding over 21 funding rounds from 25 investors that includes names like Info Edge, Ant Financial, Delivery Hero, Shunwei Capital, Vy Capital Tiger Global, Kora, and Fidelity Management, with the former being the latest and have contributed close to $50 million, $115 million and $55 million to the Zomato business recently. Just a day before Zomato’s debut on the public stock exchange of India, it raised close to Rs 4,196 crores from 186 marquee anchor investors. Info Edge India is the leading investor & shareholder in the company holding around an 18.4% stake in the business.
Zomato also witnessed a stellar public issue on July 14, 2021, for The Zomato IPO comprises a fresh issue of equity shares worth Rs 9,000 crore and an offer-for-sale (OFS) worth Rs 375 crore. The public issue was 38 times oversubscribed and gave it an edge over the combined market capitalization of five listed fast food and restaurant businesses namely, Jubilant FoodWorks (master franchisee for Domino’s Pizza India), Burger King India, Westlife Development Ltd, Barbeque-Nation Hospitality, and Speciality Restaurants.
When it comes to investments, Zomato has undertaken investment in close to ten businesses which includes names such as Adtech, Adonmo Pvt Ltd, and UrbanPiper, the Gurugram based B2B platform, and food-delivery giant for a whopping sum of $5M recently on January 28, 2022. It has also invested in Gofers, the online grocery delivery platform for a 9.3% stake in the business by investing around $120 million in June 2021.
Further, in 12 years since its inception, the company has acquired close to 14 businesses that include popular food delivery platforms and other businesses such as UberEats, MenuMania, Gastronauci, Urban spoon, Mekanist, Sparse Labs, Tech Eagle innovations, etc.
Zomato- Business Marketing Strategies-
An effective marketing strategy has contributed to the success of Zomato for years now that has made it an undisputed market leader in online food delivery apart from its efficient services. Thus, it could be safely said that both have equally contributed to a huge customer base and following on social media channels of Zomato, which is a mixture of both its USP in marketing & digital marketing tactics over years that have been explained below-
i. Digital Marketing Strategy & Tactics-Zomato online platform –
Zomato gets major traffic from different sources such as food searches (*directly on the platform) that accounts for 66.41% and 33.36% indirectly through social media marketing, paid marketing & referrals through its SEO marketing strategies which are applied to its full extent for its brand rising in the Google SERP results.
- Keyword Targets –Again, Zomato targets around 9 lakh keywords for content SEO purposes and optimizes its content organically which allows it a dominant position in its search results.
- Improved pages on websites-Zomato have listed more than 6,500 restaurants in its platform that have their pages that are updated regularly, which leads to a total of 54 million website pages more than any other platform and the same is advantageous for website SEO. Accordingly, more pages on the website mean higher authority and higher possibilities of better ranking on search engines like Google.
- URL Linkings- Another reason for the strong position of Zomato in the online food delivery businesses, is due to URL links and internal linkings. It gets its backlinks from innumerable websites having higher authority i.e. websites having .gov and .edu domains from over 13 million domains.
ii. Zomato Social Media Marketing-
Zomato has an active presence in all trending social media platforms i.e. Meta, Twitter, Instagram, and YouTube, and the target customer audience is aged between 18-35 years of age. Thus, for capturing the attention of its target audience and increasing the number of followers, it makes an extra effort by making social media ads, posts, and even memes generally daily.
iii. Paid Advertising Campaigns
Paid Marketing Strategies have been an efficient source of customer engagement for a long time. An effective paid advertising campaign helps a business to improve its online visibility and search results and Zomato knew it from the beginning. Zomato runs Google ads and even physical banners for targeting its specific customers in tier 2 & Tier 3 cities.
iv. Use of Email Marketing-
In recent years, the use of internet consumption has increased a lot in India with most of the work being done through emails. Thus, Zomato uses an email marketing strategy to gain customer attention and notifies exciting offers, discounts, ad push notifications, and quirky one-liner subjects to its customers.
v. Marketing Campaigns of Zomato
- Zomato Premier League– We Indians are crazy for cricket & food and Zomato was quick to get through this. Therefore, it crafted its IPL marketing strategy that included TV commercials with exciting offers for years, especially during IPL matches. Later, it introduced its Zomato Premier League, which is an exemplary attempt of the brand at gamification with a large list of exciting deals and discounts for the customers from the participant restaurants. Moreover, the users had to guess the name of the winner of the matches to avail further exciting offers. Zomato used social media & TV ads for the promotion of ZPL and it was a huge hit considering the number of participants was as high as 4 million.
- Zomato Gold Membership- Further, Zomato initiated a loyalty program on a subscription basis for its users subscribing to which would make the user avail offers such as extra discounts, free food delivery, and even complimentary dishes from time to time, known as Zomato Gold Membership. This was again hugely successful but came to a halt after disputes between restaurant partners & Zomato.
- On-time or free offers- Working on a similar model to that of Domino’s Pizza, Zomato launched the “On-Time or Free meal” campaign in December 2019, where users can avail this facility on all its orders by simply tapping the “On-Time or Free” button on the Zomato app. In case Zomato would be unable to deliver the food on time, the user would be eligible to get a complete refund for the order. The advertising campaigns were made through TV ads, online advertising, and social media platforms for promotion & advertising of the campaign.
- Mother’s Day Campaign- On Mother’s day 2019, Zomato created an advertisement emphasizing their role in the life of the children as well as the family and to communicate the love & respect for her by the kids to order food online using the Zomato platform. It also targeted children and youngsters to make a special day for her by ordering her favorite food while staying away in different locations.
What is the USP for Zomato’s Marketing Strategy?
The real reason behind the success tasted by Zomato during a short period is its unique market selling propositions apart from its unique ideas and the execution of these ideas. Such USP could be described through the points as provided below-
i. Faster Business Expansion in more than 22 countries rather than sticking to domestic boundaries only.
ii. Since 2011, Zomato started making business investments & acquiring a relevant business that could help it to advance and improve its business operations and at the same time could bring creativity & innovation. It has acquired around 14 major businesses like – Urbanspoon, Uber Eats, TongueStun, Fitso, Mekanist, MapleGraph, Cibando, Nextable, etc. to quote a few of them that helped the business to gain momentum.
iii. Diversified Services In recent years, Zomato has added other important business segments which could help them in the expansion of the business and increase the customer base across the country. It started subscription program ‘Zomato Gold ‘ in November 2017, which helped its customer acquisition and Whitelabel access for restaurants and new food business entrepreneurs. It launched Hyper pure platform for helping local producers and vendors on one side & restaurants & food chain businesses to get high-quality supplies in August 2018.
iv. Unique social media marketing tactics –Maintaining effective communication with end customers is always helpful for a business and helps businesses to know where they are going wrong or what needs to be changed. Zomato allows customers reviews and opinions through its platform and has its constant engagement with its audience through social media channels that made it win “’Best Brand Voice in 2020′ on Twitter.
Zomato Growth & Future Plans
Zomato has achieved tremendous success in terms of strategic business partnerships and customer following. Starting in 2008, it tasted success instantly and started expanding in major cities in India. It had already established a monopoly in cities like Delhi NCR, Bangalore, Chennai, Hyderabad, and Ahmedabad by 2011. Simultaneously, it launched its mobile application for better customer reach, which greatly contributed to the growth of the business.
In the year 2012, Zomato started the business expansion and started its business operations in countries like UAE, Sri Lanka, Qatar, United Kingdom, Philippines, South Africa, Turkey, Brazil, New Zealand, etc. around 24 nations in a full-fledged manner by 2017 that led to an 81% increase in the business revenue in the year 2017 itself but had to shut business operations in two countries.
Zomato also started Whitelabel Access services in India and later expanded to all 22 countries where it operates currently. In an unprecedented order spike during New Year’s eve, food delivery giant Zomato recorded delivering over 2.5 million orders packing in 7100+ orders per minute. Zomato’s net revenue was Rs.1312.6 crores for the FY19 reached almost double for FY20 to a total of Rs. 2,486 Crores. Not only was this, the number of highest orders reaching its zenith 4250 orders per minute during the same FY 20. Though the Covid-19 pandemic posed certain challenges for the business and at present, the unicorn start-up is focusing on its Indian business primarily after wrapping up most of its international businesses. It has continuously strived to offer better to the customers within the affordable price ranges by entering tie-ups with a diverse range of national and international companies including restaurants, cafes, fin-tech companies, and food businesses, and is expected to grow at a CAGR rate of 40%.
Some of the partnerships worth mentioning are-
- Zomato entered a partnership with the ‘Govt. of India” for a ‘Street Food Project” on Feb 5, 2021.
- To provide financial support to the businesses debt-ridden due to the Covid pandemic, it entered partnerships with InCred to extend credit facilities for its restaurant partners on December 21, 2020
- Zomato collaborated with BioD Energy on Oct 21, 2019, to reduce the unnecessary wastage of cooking oil in the country.
- For encouraging online digital payments for its food delivery and other services offered through the platform, it entered into a partnership with Paytm in Jan 2019.
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