Zomato Market and Consumer Analysis

|| Volume 1 ||Issue Sept 6 || 2016||ISSN (Online) 2456-0774 INTERNATIONAL
JOURNAL OF ADVANCE SCIENTIFIC RESEARCH
AND ENGINEERING TRENDS
Zomato - Market and Consumer Analysis

Aniruddha Deshpande
Gurgaon, Haryana, India
Forayed overseas in
STRENGTHS September 2012 by
Abstrct-Some start-ups in the Indian Food & launching services in
Beverages industry have revolutionized the UAE, followed by swift
A 2008 startup recently expansion across south
way we look around for places to dine. The entered the $1-billion
scenario has changed from previous practice east Asia, UK, South
valuation league Africa, Europe
when we had to actually go to restaurants to according to New York-
select the restaurant and have the experience. based venture capital
Today, choice for the best places to have food tracker CB Insights In 2014 acquired 5
is just a click away. One can choose the best companies valued
rated place and then decide to enjoy there between $1 and $3
Revenue growth 8.5x million in the Czech
with friends and family. from Rs. 11.4 crore in Republic, Slovakia,
FY2012-13 to Rs. 96.7 Poland, New Zealand
I INTRODUCTION crore in FY2014-15 and Italy
Zomato 90 million unique Acquired Urban spoon

monthly users; Up 300% in January 2015 for $55
Zomato is an online website which provides from last year; Alexa million; establishing
restaurant search and discovery service. It rank 146 in India and operations in the US,
provides its customers a platform to evaluate 1,210 in the world as of Canada and Australia;
choices for great places to eat. It has set foot on June 2015 And coming in direct
22 countries including India. The Gurgaon competition with global
headquartered company Zomato was named 43 offices worldwide players like Yelp,
among the top 25 most promising internet spread across 22 Foursquare
companies in India by SmartTechie Magazine. countries with
Because of its consistent performance and Acquired Next able (US
success, it has been successful in getting regular 2000 plus Zomans from based table management
investments from Info Edge (India). 65 nationalities platform) to launch table
reservation service in
II PURPOSE Listing more than a US, India and Dubai
million restaurants
The purpose of this case study is to do an analysis spread in over 10,000 Profitable in India and
of the way Zomato has scaled up its operations, cities across 22 countries the UAE; Hoping to
expanded its business into various countries. We break even in South
also plan to find out the strengths, weaknesses, Focused solely on food Africa, New Zealand,
future opportunities and threats of their business
and restaurants, its Indonesia and Portugal
model. This will ultimately help us understand the
content is created by its by October
F&B industry and build our opinions about few
business scenarios which will help us build own employees rather
solutions to them. than crowd-sourcing it IV WEAKNESSES
Focused on the social With expansion to

layers on the website and various countries, it now
on maintaining a rock has competitors like
solid content platform Yelp (revenue $377.5
which is funny and million) which are much
interactive at the same older and bigger than
time Zomato, something
which it has not faced.
Mobile application app
has recorded 2.5 million As a result of hard focus
downloads; 45% traffic on global expansion,
comes from mobile Zomato lost out on the
application first mover advantage in
the field of online food delivery to Tiny Owl, food panda.
146

10000 restaurants its competitors get in.
Quality and veracity of data; in many cases across India.
the information regarding menu cards is Intense competition
either incomplete or old. For example, in Zomato Book: To be from national and
certain restaurants, menu card without launched in Australia, international brands -
prices in mentioned. In certain other cases, India and UAE, With expansion to
the menu is partial through acquiring various countries, it
NexTable of USA, this now has competitors
One of the main sources of revenue for is a platform for like Yelp (revenue
Zomato is the promotion of restaurants. reserving restaurants $377.5 million) which
This brings a possibility of conflict of and managing tables are much older and
interests and lack of clarity of ratings bigger than Zomato.
VI THREATS On the other hand, we
V OPPORTUNITIES have small players
Aggressive expansion which are slowly
Opportunities can be broadly classified in a huge market
into 2 categories: landscape – Zomato covering ground in
has been continuously domestic area like –
New/Emerging Markets acquiring companies
for expansion – which o Foodpanda
Emerging Markets: With India’s Internet may not be a bad thing.
population poised to rise to half a billion But when this comes at o Tiny Owl
by 2018, a cost of losing out
domestic ground, it o Burrp

Zomato’s market is all set to grow
further. The number of people using their may not be the best
phones to access the Internet has grown thing to do. Zomato o Yelp
spectacularly from 90 million in June may be missing out on
2013 to 185 million in June 2014; such a strengthening and o TimesCity
growth rate results in a huge market to innovating on the
existing network by guide
tap. Being an acquisition hungry
company, it wants to expand globally focusing on expansion.
with India’s market share at only 8%; There are a lot of Similarly, there are 18
Zomato’s CEO Deepinder Goyal next things which they can startups in various
move will be to increase penetration in do to get more people stages of evolution –
global markets. to use their services for all set to become
e.g. Online delivery – threats to Zomato.
they lost out on the
Online Services
first mover advantage Restaurants low on
by not focusing on this ratings may never be
Zomato for Business: A subscription- and allowed breeding
able to get good
based model wherein merchants have ground for startups like number of patrons –
access to their listings. This allows them Foodpanda to get into
not everyone has the
to share daily discounts, promos or this space and stand up funding to improve
special menus, increasing their as a competitor. standards – they may
interaction with consumers on a real-time Tomorrow their might
actually lose out their
basis be some other startup existing customers. All
which may give some such restaurants
Cashless transactions: Currently other service which owners may resort to
available only in Dubai, diners at Zomato doesn’t protest.
participating restaurants pay through the provide and gain
Zomato app, eliminating the need to use market share for itself.
Political
cash/swipe cards. On every such Hence, it may not be
transaction, Zomato receives a the best policy to
percentage cut on the total amount. There ignore the existing Digital India
is huge opportunity for such a venture in market while being on Campaign launched by
the other existing markets like India and the mission of Prime Minister
the US Narendra Modi will
expansion. As clearly
help in getting more
evident in the
Internet penetration in
Online Ordering Service - Launched in mentioned above
India which will lead
Delhi, Bangalore and Mumbai in mid- image, there is a huge
to greater access to
April, soon to be launched Pan-India. scope for improvement
almost every market.
Currently with 2000 restaurant for Zomato. There are
Under this, National
so many avenues that it
Optical Fiber Network
partners, Zomato aims to partner with needs to get into before
campaign recently launched will help to enhancing and will require skilled
reach even Gram Panchayats. Zomato developing the skill of people to establish
can take advantage of this by getting youth which in turn themselves in the new
restaurants of cities covered under will help to get many market. Hence,
Digital India Campaign. people with knowledge PMKVY will help to
and skill. Zomato, to provide skilled people
Recently launched Pradhan Mantri increase market which could be hired
Kaushal Vikas Yojana will be focused on penetration and reach, by Zomato
147

substantial change in the mobile app is also very
lifestyle pattern. Gone fast. The only problem
are the days of 9 to 6 around the same is with
job, people are now the menus you need high
working around the resolution otherwise it gets
clock. More and more too cluttered to read
people especially
youngsters and new The restaurant finder
age working couples module is also very well
love to eat out. As per made. It has been
the survey released by integrated with the app as
national Sample well which is the highlight
Survey Commission because one will need to
the proportion of find the restaurant on the
expenditure of dining go. The restaurant
out has increased information is well
steadily from 19% in thought out and organized
2000 to 30% in 2012 which makes sure you get
the information you are
The biggest social looking for without any
factor of Zomato is hassle
User Engagement.
Reviews and Ratings The number of vote
make the website very options adds a lot of
engaging which context to the rating. There
Indian government’s focus on Ease of ensures customer is also a focus on
Doing business will help bring more participation. The personalization with the
investments in form of FIIs and FDIs. concept of incentive personalize option and
Zomato can be benefited with the based rating thus you can play with the
expected investment, which would help it interface the way you like
to grow.
has also caught up with The website is SEO
Economic people and has made (Search Engine
them socially active Optimization) friendly
Zomato grew 1399% from 2011 to 2014. and responsible which makes sure that it
Its revenue was 96.7 crore INR in 2014- pops up on the search
15. Zomato is present in 22 countries and Customer Service of engine. There is a huge
contributing to respective economies of Zomato is also very challenge that Zomato will
the countries amazing. Prompt and have to face from Google
friendly replies ensure because it is promoting its
Increase in service tax from 12.36% to that Zomato keeps its own restaurant finder and
14% will lead to increase in prices of customers loyal. booking tool. Zomato will
services which in turn will impact Zomato Customer Service is an have to constantly evolve
important aspect of and innovate and add
Zomato is starting cashless transaction any service company value if they want to
which will create jobs in various cities. and Zomato has sustain in the market
Currently, Zomato employs 2319 definitely taken a lead
employees here over other Indian The business model of the
Companies Zomato Revolves around
Zomato is attracting various investments gate keeping of
and funding from Indian as well as Technological information, which means
foreign investors which in turn is good for that when you call a
Indian economy. The biggest advantage restaurant, its number gets
of Zomato is it has a masked, and you are being
beautifully designed routed through Zomato. It
Social
UI (User Interface), also requires you to login
to use the service. The
In a span of six years Zomato has become which is beautiful and reason behind this is
India’s favorite online Restaurant at the same time easy
to browse Zomato needs to compete
Discovery tool. It has influenced and with companies like
changed the way how people select their differentiating it from Google and thus to get the
restaurants other Indian tech start-
ups. The speed with funding they need more
which the website registered users. Even if
There has been an increase in the middle with the gate keeping
opens is amazing and
class Indian working population and feature they miss on a
small percentage of users who are Threat from experience gives them an
skeptical about their privacy they will Substitutes edge over competition. As
surely add a lot of information from Deepinder Goyal, founder,
people who register. Zomato is of the strong Zomato, says, Zomato is
belief that their focus driven to constantly
VII PORTER’s FIVE FORCES on restaurant discovery improve our product
ANALYSIS and facilitating a within the space with a
holistic dining small margin of error.
148

events and provides team gives an added
Zomato realizes that it is a winner-takes- basic data about advantage to Zomato.
all and is therefore focused on businesses, Zomato
dominating the competition within its provides information Burrp! – Burrp! is a
space. (photos, menus and competitor to Zomato.
geographic coordinates) But due to its expansion
and allows users to from restaurant listing to
create their own other divisions such as
network of foodies for events and retail outlets,
personalized the company’s focus has
recommendations. The been distributed whereas
flipside for Zomato: Zomato has stuck to its
Total number of unique core functions.
monthly visitors to Yelp
is a staggering 139 TinyOwl – TinyOwl is an
million, amounting to emerging start-up with
four times Zomato’s business model of food
existing traffic of 35 ordering through App on
million. In terms of smart phones. It is
revenue, Zomato earned currently present in
$6 million in revenue Bangalore, Mumbai,
compared to Yelp’s $232 Gurgaon, Hyderabad and
million in 2014. Pune.
TimeOut- Founded in Yumist – Yumist is a new

1968, it has become a player in this market
global authority on started by Ex-CMO of
entertainment and Zomato which is targeting
events all across the customers who want low
world. With a reach to priced daily meals market.
39 million people, it has Although it has received
a huge market share, the investments worth
Google Maps - Latest release of Google US$ 1 million, but these
Maps for desktops includes listings of however is more known investments are till now
restaurants in the neighborhood. It also for providing not significant to compete
facilitates restaurant search and provides information on events with Zomato.
photos, reviews, ratings and even the and happenings than
floor the business is located at. restaurant listings and Other New Start-ups –
reviews Since majority There are other new start-
of users check rating ups which are nascent in
Zomato’s advantage over Maps is that
and not reviews, it is stage but growing. Some
Maps hasn’t started menu listings yet
very important to of them are FRSH, Eatlo,
maintain fair ratings on Holachef, SpoonJoy,
Local Competition- the website. DELIVERY CHEF etc.
FoodPanda and JustEat- FoodPanda Industry Rivalry
gained first mover advantage by Industry Rivalry in
launching the online order facility earlier Major International
Foodpanda– foodpanda Markets
than Zomato, thus resulting in Zomato
who has also acquired
losing relevant market share
TastyKhana and JustEat Yelp – Yelp is the biggest
is a competitor to competitor to Zomato in
JustDial- JustDial offers a wide range of Zomato in this
restaurant listings; however, it loses out marketspace. But, as per US. It is present in 31
against Zomato as it doesn’t have an countries. To counter
one of interviews with Yelp, Zomato acquired
equivalent collection of reviews, photos Mr. Deepinder Goyal,
and user engagement. Also, in the minds Zomato doesn’t consider UrbanSpoon in US but
of consumers, Zomato offers a still there is major gap to
it as a threat because reach no.1 in US market.
specialized and differentiated service foodpanda in spite of
thus making it a natural choice being present in market
for 3 years has clocked HungerGo – HungerGo
Global Competition- only 10,000 orders a day is major player in
whereas people visiting Singapore where
Yelp-Basic difference between Yelp and Zomato has 1, 00,000
Zomato is that while Yelp publishes searches a day. Zomato doesn’t want to
crowd-sourced reviews, organizes social Zomato’s large sales enter due to tough
competition poised by HungerGo. are already major Bargaining power of
players established in buyers
Yadig & Timeout – Yadig and TimeOut market. Zomato is very
are other major players in UAE but well established and  Presence of various
Zomato is market leader in UAE with market leader. There are competitor apps in the
65% market share. other players such as market means that it is
foodpanda, TinyOwl easy for the buyers to
Barriers to Entry – and Burrp which have switch to other apps like
already having decent food panda, Burrp!
market share. Tinyowl, just eat.
Barriers to entry are very high as there
149

industry. Zomato has challenge Zomato
With improving features, and upgrades been very effective in because they will have
such as food ordering, people may switch the past few years. smaller economies of
to other apps offering better features. However, they have scale. However, this is
been late in entering one area where if the
Since it is easy-to-use online platform, the ordering segment new entrant can
constraints related to distribution is and Food Panda has generate enough
eliminated. This removes a potential taken effective strides capital they can
factor for bargaining of buyers. in the same. Any new challenge Zomato on
competitors will need the ground level even
to work extensively on though economies of
Bargaining power of suppliers their brand value in scale are tilted towards
order to effectively Zomato.
Suppliers of Zomato - Print media and compete. Thus this
online media - Editors' choice on play threat is low for Geographical Factors
store Zomato however they affecting Competition
need to constantly
Zomato has become famous through its innovate in different Food Panda is present
publicity in print media, through play verticals to ensure that in 200 Indian cities
store, through advertisements in they build on the and has made huge
Restaurants. To add to this, there is also advantage that they strides in the recent
dependency on reviewers - they do not have created. past however it is still
have any way to check the authenticity of considerably lagging
reviews as of now. Advanced Zomato in terms of
technologies territory covered as
These all become the suppliers of Zomato has presence
Zomato. Thus the threats which they face This is another area not only in huge
are: where Zomato has number of Indian cities
taken huge strides. As but also in 22 different
What if restaurants do not want to list mentioned earlier in countries and they are
themselves on Zomato? What if they the technological taking strides very
move to another app? analysis, the app and fast. Tying up with
website are restaurants and getting
Since the reviews are subject to the aesthetically the information
perspective of the patron, it may be a organized in the way
biased one - moreover, spam may defeat beautiful and the whole Zomato has done is a
the purpose - Ratings may get subjective. experience is huge challenge for any
They have a content team, but it needs to enriching! Thus new new entrant. However,
expand. entrants will have to seeing the pace at
come up with an which Zomato has
Zomato does not have a system of overhaul of the whole reached out and
rewarding the reviewers who spend a lot strategy as far as expanded it seems
of time writing reviews - which may put application and possible and thus
them off from writing technological Zomato will have to
advancements are constantly maintain
that advantage and
Incentives for reviewers are required - if concerned. Innovation
keep coming out with
competitors give them - they may switch in technology
new and innovative
to other apps - they should make sure the positively affects
Zomato. models.
reviewers stay put
Industry affects Difficult learning

Many restaurants are not available on
economies of Scale curve
Zomato. More publicity is required.
Though Zomato has
More - Mobile companies which strike Economies of scale
been able to do learn
deals with Zomato to keep a pre-installed positively affects large
producer by lowering and grow in the market
app may prove to be the suppliers for
at a very effective
Zomato. They may charge more to allow the cost of the next unit
of output at lower cost. speed; the learning
Zomato pre-installed in their phones.
Thus it is relatively curve for any new
easier and economical entrant into the market
Threat of new entrants will be very steep.
for Zomato to expand
at a faster pace. Any
Strong Brand Name new entrant will have VIII CONSUMER
to pump in a lot of BEHAVIOUR
A brand name is a must to survive in the investment to ANALYSIS
150

chunk of users does not
feel the necessity to write
This indicates that there a review – this can be
worked upon by
The above results indicate that the users is still a lot of scope providing some incentive
of Zomato are enjoying the services towards involving the
consumer for value or recognition to them.
being offered. Zomato is meeting its
purpose of ensuring that its users do not addition and co-creation.
have to go hungry. It is guiding patrons Managers generally
to places to have food. interact with the
audience to get their
views for betterment of
their restaurant.
These responses clearly

indicate that only a minor
section of the users are
using the ordering app.
Many people are yet to
This is a direct medium hear about the new
to involve customers. facility provided by
Supplier and consumer Zomato. This is
of the information is the something to be
general public. A huge deliberated on.
are many who
have second
thoughts about
their
authenticity.
The responses Thus it is
above clearly something
indicate that which needs to These clearly
though a large be worked indicate
number of upon. towards the
users roughly threat of
believe the competitors of
reviews on Zomato.
Zomato, there
151
http://news.thedigest.co/2
015/06/Zomato-reports-
This reflects the rs-96-7-cr- revenue-rs-
customer satisfaction of 136-cr-ebitda-loss-for-
Zomato - shows a good 2014-15
overall satisfaction. http://economictimes.indi
atimes.com/news/politics-
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|| Volume 1 ||Issue Sept 6 || 2016||ISSN (Online) 2456-0774 INTERNATIONAL

JOURNAL OF ADVANCE SCIENTIFIC RESEARCH

AND ENGINEERING TRENDS