Global Immersion: Research Paper

Chapter 1 - Introduction
IIT-Delhi graduates and ex-Bain &Co. employees, Deepinder Goyal and Pankaj Chaddah,
created a wide-ranging communication platform between the users and restaurants called
Zomato Media Pvt. Ltd. (previously, FoodieBay) in Gurgaon in July 2008. A Delhi-based
startup, after expanding its operations within India, is now present in 22 countries across the
globe (Regions: India, United Arab Emirates, United States, United Kingdom, Australia,
Canada, New Zealand, Czech Republic, Chile, Ireland, Indonesia, Italy, Lebanon, the
Philippines, Portugal, Poland, Qatar, South Africa, Slovakia, Brazil, Sri Lanka, Turkey,
Malaysia), listing over 1 million restaurants, with a workforce of 2000 plus people, making it
Indias leading international eatery finding website and app, with a valuation of USD 660
million. With multiple rounds of funding, Info Edge has by far capitalized INR 4.83 billion in
Zomato and holds a 50% stake in the company. Also, Zomato has a traffic of over 100
million people visiting Zomato each month and 82% of the traffic comes from outside India.
Zomatos global strategy involves entering the mature markets through M&A when they
recognize that a product-market is right and has a lineup that can move swiftly giving them
an already set-up database and customer segment (e.g. in the U.S, Australia). For a newer
geography, where there is no market leader, they build from scratch and penetrate the market
(e.g. the UAE, London). In 2012, it spread wings internationally and began acquiring
restaurant citing companies in embryonic markets and completed five low-key acquisitions
before guzzling up UrbanSpoon to mark its admittance into one of the major markets.
Zomato believed that acquiring a native company makes it much simpler for them to grow in
the market with the help of local outlook given by the people and leveraging their knowledge
and expertise.
List of acquisitions
Country
New Zealand
Slovakia
Czech Republic
Poland
Italy
USA
Turkey
India
USA

Firm
Menu-Mania
Obedovat.sk
Lunchtime.cz
Gastronauci
Cibando
Urbanspoon
Mekanist
Maple POS
NexTable

Year
July 2014
August 2014
August 2014
September 2014
December 2014
January 2015
January 2015
April 2015
April 2015

1.1 Why Zomato?

Zomato being the first Indian tech company to go global has made its way rapidly up the
globalization ladder. As the basis of my research study, I have chosen Zomato as it gives me
quite an insight on how a startup, in this extensive competitive world, has managed to enter
mature markets with its strategies and even gain high market share and be a dominant player
in majority of its markets. Zomato, with its strong ethics, cultural understanding and a hunger

for expansion and development, is rapidly changing its tactics and outlook to keep up with
this dynamic world. With its global presence right now, Zomato is surely the Google of
food as dreamt by the CEO. Understanding its globalization strategy specially in the UAE
helps to get a flavor of entering a new market with similar yet a differentiated market.
Chapter 2 - What led to Zomatos success in the UAE market?
After seven months of opening up in Dubai, they were already the largest restaurant search
and review website in the UAE, with 75 per cent of the market share and getting over 0.3
million users a month. As Dubai was their first international expansion, response from the
UAE market acted as a catalyst that gave them a confidence of expanding themselves in other
countries as well. As per Alexa.com, Zomato receives 55.3% of visitors from India and
10.2% (the second largest amount of visitors) from UAE.
The way Zomato converted its strengths to capture the market opportunity can further be
explained with the help of Dunnings Model.

Figure 1.1 The eclectic theory (Dunning)

2.1 Ownership-specific advantage
The ownership specific advantage refers to the competitive advantages that the firm has
before entering a particular market. It is the core competencies that a firm can leverage in a
market highlighting the strengths of the company.
Zomato, before entering the UAE market, already had an established market in India with its
coverage in Delhi, Mumbai, Chennai, Kolkata, Bangalore, Pune, Chennai, Hyderabad and
Ahmedabad. Post the strong foothold in the Indian territory, they had a choice of going to
some other verticals within India or go to some other countries with the same product.
Zomato CEO, Deepinder Goyal, believed that entering new verticals would be learning a new
business altogether. Therefore, they decided upon learning a new country.
Zomato is not just an app for searching for restaurant and reviews, its an enhanced userinteractive platform. It provides for scanned menus, geographical location, users rating and
reviews, pictures, cost for two people, cuisines served, restaurant timings, availability of Bar,
seating, Wi-Fi, etc.

Zomato has an upright rating mechanism and communal platform. They have an automated
system to check on spam reviews and a set-up of moderation team which appraises the
reviews within a 12-hour period. Zomato stands out because of (1) Exceptional quality of
People (2) Human approach to technical problems by throwing away people to bring
solutions to the problem gives them a whole new angle (3) Focus on integration of teams and
geographies while balancing the culture.
Achieving customer loyalty and brand recall by robust social media existence and dynamic
interaction holds crucial to Zomato to leave a mark. Zomato as on January 15, 2016 has more
than 235K followers on twitter and about 1272K plus likes on Facebook.
Zomato also differentiated itself communally by developing a sociable badge system where
users start with foodie and move up the ladder by becoming a big foodie, super foodie
and ultimately a connoisseur as they write further reviews and increase their followers.
2.2 Location-specific Advantage
Zomato entered the UAE market, in Dubai in September 2012 with a preliminary investment
of USD 1 million and quickly expanded to Sharjah and Abu Dhabi. Dubai, being one of the
most accepted business terminus as well as a tourist destination with a lively restaurant
industry and elevated internet dispersion, made Zomato to choose it as the first global
destination for expansion. Its initial success was primarily due to colossal Indian spread in the
UAE. The macro-economic conditions of healthy GDP growth rate (4.6%) and low inflation
rate (3.5%) is promising for the business. With a ranking of 31 in ease of doing business
index and other factors such as free-tax regime, diversified population-mix (it is estimated
that Dubai has around 88% of foreign nationals), Dubai provides a much stable prospective
for dining out/food search base.
Dubai had two distinct restaurant segments premium and affordable; due to demographic
separation by vicinity in the city and each segment was self-sufficient in the assortment of
cuisines. Dubai, per say, has an extremely multicultural and tech savvy populace with an
emergent need to try different cuisines like Indian, Japanese, Chinese and Italian food and an
alacrity to tryout different savors.
The excellent infrastructure as well as availability of high-speed internet (11.7 Mbps) makes
it easier to access data online. TimeOut, the Explorer and Fodors were Zomatos only
competitors. However as none of them were user-interactive, it had a huge opportunity to
enter the market with such an idea. Also, the number of restaurants per person as well as the
spending power of the tourists and the residents are quite high with about 4,200 eateries for a
population of 2 million.
Zomato customized the app according to the needs of the local market by adding a Sheesha
filter as Sheesha cafes are trendy in the UAE. Also, on customers demand, the company
plans to introduce a sports bar as well as a water view filter.
Likewise, Zomato exemplifies innovation and adaptability by rolling out Cashless payments
(in a select syndicate with Emirates NBD) in Dubai first, where there was less stringency in
credit card payments making it much favorable for Zomato to pilot Zomato cashless app.

Under this, the users pay by Checking into their preferred restaurants on social media
omitting the elementary need to carry money.
Zomato also partnered with Emirates NBD which lets Emirates NBD customers to use
Zomato to get benefit of discounts of upto 30% at their favorite restaurants upon spending
through an Emirates NBD credit or Debit card.
2.3 Internalization advantage
To evaluate the markets, Zomato follows a top down approach of in-depth ground level
study. They segregate and prefer the markets achievable on a macro-level (regulatory,
demographics, culture, etc.) and then go with the all-inclusive operations process from
collecting material and talking about conceivable syndicates with local suppliers to engaging
with customers by displaying them the merchandise.
Zomato provides a trouble-free, understandable interface and a solid content manifesto with
real time, up-to-date and relevant data as they collect and publish the content themselves
rather than crowd-sourcing the matter and also apprising and reviewing of the data is done
every 90 days. With its proficient employees and own set of teams for marketing and
research activities, the company is itself responsible for all the inputs and outputs.
Before bringing any new innovation into the market, Zomato first tests their technology in
India and then gauge into further markets. To expand, Zomato tries to have a first-mover
benefit either by entering the market when they recognize a product-market right and have a
lineup that can move swiftly or in case of a newer geography where there is no market leader,
they build from scratch and penetrate the market.
Zomato continuously tweaks its products to have concurrent engagement with the customers.
To exemplify this, Zomato has introduced an in-app chat feature (in India and UAE) that lets
the user to track/cancel meal orders, check status of refunds, get information on promotional
offers, discounts, etc, thus, enhancing the communication flow between the users and
Zomato. It has also introduced an innovative feature called Zomato Whitelabel, a platform for
corporations to build and administer their own Android and iOS apps- even with slight to notso-much technical proficiencies. Also in working is Zomato Base, a POS (point of sale)
technique app which facilitates real time consumer-business interface.
To create a stronger interface between the customers and restaurateurs, Zomato has
comprehensively invested in SMO (Social Media optimization), SEO (Search engine
Optimization) and has worked a lot to develop its UI formulating it to be more
communicating. More than 50% of the traffic arises from their mobile app.

2.4 Hollensens Model for Foreign market entry

Figure 1.2 Factors affecting the foreign market entry mode decision
Source: http://sasa-kovacevic.dk/marketing-in-a-gobal-world-exam/
Using Hollensens Model for model of entry, we could point out that it was beneficial for
Zomato to enter the UAE market by directly setting up an office there.
Zomatos advantages in the UAE made it fit for high internalization mode of entry in that
market. Zomato had high product differentiation, opportunistic behavior and low intensity of
competition as there was no other company in the UAE that provided the consumers with a
similar app. It also exercised control over product innovations and adaptability. Also, as
majority of UAE population consisted of Indians (about 40 %), there was less socio-cultural
difference between the home and host country. UAE, because of growing commercial hub,
had an ever increasing tourist population (13.2 million tourists visited UAE in 2014) leading
to a stable-to-high demand for restaurant search websites/apps.
Challenges to overcome
As Zomato is a people oriented company, their main challenge rests in identifying and hiring
the right people who not only possess the necessary skills but also have a strong
understanding of the culture. With the rapid change in technology, Zomato has to keep up
with the technological advancement to imbibe the latest change in trends which will effect
the consumer demand. The biggest challenge in UAE for the company is adhering to the local
regulatory framework. Since the app is a user-interface platform, operating in some diverse
languages, is a challenge.
Zomato also encounters bandwidth setbacks in their operations and sales team in Dubai to
execute everything. Also, fluctuation in the stock and rupee prices leads to effect on funding
required for global expansion of the business.
Efficacious product migration is important post its seven acquisitions all across the globe.

Full stack and Enterprise Markets

Zomato as a company is focusing on the markets which already has significant traction.
As now the onus of breaking-even lies in the hands of the company, they have divided the
market into Full stack and Enterprise regions which will help bring back the focus on the
different markets and also divide the efforts so as to materialize on the experience in the long
run. Full stack markets are the Middle Eat, Australia, Southeast Asia (Indonesia and
Philippines) and New Zealand which are growing rapidly and Zomato is already the strongest
player in line, whereas Enterprise regions are trivial, slow-growth economies like Europe
and the U.S. where Zomato is facing stiff competition.
Due to different market regions, the strategies adopted by Zomato also differentiates. Even
though advertising is the main source of revenue from Middle east and Asian markets, the
same cannot be applied to the U.S. markets. There the company focuses on earning revenue
through transactions businesses which led to shift in focus to table management and
reservations engine known as Zomato Book.
Through this segregation of markets and business operations, Zomato expects 40% of their
revenues from advertisements, 30% of revenues from orders and the remaining 30% from
Enterprise products like Zomato Book, Zomato Cashless, etc.

Chapter 3 Conclusion
Both the markets in India and UAE turned out to be the profitable segment for Zomato as
they have break-even. Due to its high internalization advantages explained in Hollensess and
Dunning model, and with a direct entry into UAE market, Zomato was able to cash in the
opportunity of no-competition market with high demand for the product in the gastronomic
hub of tourists. Zomato, with its ability to culturally adapt to the needs of the market and be
technologically innovative, has been able to be adept in gaining the market share and
maintain a competitive edge.
Due to the tie-ups with Emirates NBD and operations in a tax-free economy, Zomato gained
a strong regional support from Dubai which facilitated its expansion in rest of the UAE.
Zomato acknowledged the need to recruit local people to have a better cultural and groundlevel understanding of the market making it easier, faster and convenient to connect to the
restaurateurs and market their products. Zomato has already started to monetize its operations
in India and Dubai since they have become profitable.
In countries like the U.S., Canada, Australia, Poland, Italy, etc., Zomato was able to fast track
its expansion process due to availability of a well established market. Through acquisitions,
Zomato was able to tap the markets potential using the existing network and leveraging its
technological expertise.
Right now, even though Zomato is going through a turbulent time with its operating revenues
and losses increasing three-folds from the previous financial years, Zomato has marked upon
a global presence and is receiving a heavy flow of traffic. Given a period of few years,
Zomatos strategies of knowing the markets in and out and accordingly choosing the market,
Zomato will be a market player with a dominant market share.

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