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Scripting success with e-Commerce its revenue. While other competitors cave-in
to business owners from a variety of
Founded in the year 2008 as FoodieBay by
segments, Zomato is focused on restaurateurs
Deepinder Goyal (who is the CEO of the firm
specifically based in the country of operation.
at present) and Pankaj Chaddah, Zomato was
For these business owners, Zomato acts as
rechristened to its current name in 2010. An
highly targeted advertising platform allowing
online restaurant search and discovery service
the customers to effectively interact through
provider, Zomato has a major presence in 23
its portal with the owners to build their dining
countries. Its core features include provision
options. Zomato has an extensive database of
of information and reviews of restaurants
1.4 million restaurants across 23 different
through its portal, scanned menus, photos,
countries, and it allows the customers to read
and geocoded coordinates for restaurants. If
menus, make table bookings, and order food
also allows the users to create their own
for delivery by accessing this database
network of foodies for personalized
through its online portal. Although, there are
recommendations. The firm has been
other players offering similar services such as
fortunate enough to receive substantial
OpenTable, Just Eat, and Deliveroo who have
funding from investors with Info Edge India
been doing this for years, Zomato stands
being a prominent one. At the same time, it
apart because of its low overheads and
has been able to spread its wings globally
forward-thinking customer acquisition model.
through some major acquisitions.
Goyal adds that his customer acquisition costs
In India, food oriented online commerce are considerably lower than the competitors
services have never received substantial who spend up to $15 per customer; in
market response. And Zomato, which is one comparison, Zomato spends an average of
of the biggest online food giant operating in just $0.04 per customer. After a customer
India, too took a dip when its net loss places his first online order, it adds to the
amounted to INR 590 crores in the 2015-16 profitability of the firm as at this moment
fiscal. However, it is worth mentioning that Zomato breaks even on its costs with the
despite the losses, its position was far better customer. Additionally, Zomato has a large
than its competitors, and Zomato was able to registered user base (19 million registered
quickly revive from the losses as seen from users till March 2016), so it charges relatively
the following numbers: Zomato saw a surge high for a banner space on its mobile
in the number of orders per day (2 million in application.
2017 as compared to 0.5 million in 2016). The
The company promises fresh data to its
CEO believes that constant effort towards
customers. The data is refreshed every three
improving its product with less room for error
months; hence, it remains relevant and
is the key to growth maintenance of the good
updated. For this purpose, Zomato has
giant. This holistic experience of restaurant
maintained its own team of foot soldiers who
discovery and dining provides them with an
go to each restaurant and maintain their data.
edge in competition.
This feet-on-street model sure differentiates
Zomato’s business model is worth an insight the firm from the rest, and although the
because that enables it to survive any crisis process is too intensive, the management
the in the food industry, or the Indian believes this to be its strength. The collection
economy for that matter. A core feature of of first-hand information from cafés bars, and
Zomato’s business model is restaurant restaurants allows the presence of rich
advertising which accounts for approx. 75% of content on their website, and this is what
(real-time refreshed data) attracts the

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customers back to Zomato. Another feature similar tie-up of the firm with Uber lasted for
added on its portal is the ability of the users a year till 2016. Lately, the two have become
to review and give their opinions about a food rivals, following the launch of Uber Eats, an
space that they recently visited. The users are online food ordering company, in India.
also encouraged to build and share the stories
In 2015, Zomato also acquired MapleGraph
of their food experiences which make the site
(which had built Maple POS), a cloud base
more social and helps to gain popularity.
POS for restaurants. This has been renamed
A number of acquisitions made by the firm to Zomato Base, and it is an Android-based
have allowed it an unprecedented POS system which is customizable. With this
diversification. E.g. acquisition of food acquisition, inventory management at the
delivery start-up, Runnr, in 2017 has let it firm has been automated, and it also allows
diversify in food delivery services, an area payment through debit and credit cards via an
Zomato had overlooked in the past. With this, in-built payment solution. Besides this,
Zomato has also launched a new service Zomato Base also includes features for menu
called Zomato Valet which focuses on food management, recipe management CRM
delivery from high-value restaurants who module, data analytics, printing of electronic
don’t deliver on their own. The main motive receipts, etc. What really differentiates
is to seek bulk orders for food delivery, such Zomato is the use of technology in not just
as, on some special occasion when the building customer base but also in fostering
average order value is expected to be high. relationships with restaurant owners. The
The delivery for the same would be fulfilled food-tech company leverages technology to
through a hybrid delivery model implying that business owners to facilitate their services
parent company alone where the order has and aid in their growth. It is also creating a
been placed would not deliver the complete marketplace for these restaurateurs to
order. As in the case of Zomato, almost 93% purchase products such as cutlery, or
of Zomato’s order fulfillment occurs through restaurant related technological solutions,
the restaurants themselves where the order and also aids in licensing and choice of
have been placed, while the remaining 7% is vendors. This aims to provide a one-stop
fulfilled by third party logistics firms that have platform for complete operation of a
been roped in. The firm made a major restaurant. Zomato is planning a massive
acquisition for $52 million in an all cash-deal rollout of this feature and aiming to
to acquire Urbanspoon and thus made an eventually become an integrated platform for
entry into be the biggest market of all, USA. interaction between business owners and
Urbanspoon has a strong presence on mobile customers.
applications in the US, Australia, Canada, New
Another product which is being offered by the
Zealand, Ireland, and UK, which allows
firm is that of online table reservation and
Zomato to make foray into these markets as
management under the name Zomato Book.
well. The firm also tied up with OLA for 2017
The response towards the product is
to let their customers use either firm’s
extremely variable depending on the country
application to order their offering or to make
of operation as culture influences user
payments. E.g. Zomato app users can book
behavior. E.g. in markets such as London and
OLA rides through the other’s app, while users
Dubai where users are accustomed to
can pay for Zomato online orders using OLA
advanced table reservation, the product is a
Money. A Zomato micro-app has also been
success. While in India, efforts are being
launched for OLA Play which provides many
made by the company to promote the feature
features of Zomato to OLA Play customers. A

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and gain customer attention. Another

feather in the Zomato’s cap is the ‘Name and
Shame’ feature. When Zomato finds a
restaurant guilty of obtaining reviews Discussion Points:
unethically, it displays a yellow badge against
that restaurant (which stays on the portal for 1. Give detailed insight into the core
30 days); this badge serves as a warning to feature of Zomat’s business model
consumers before they browse through the which is, restaurant advertising.
review. Although this has fetched mixed 2. How does data add to Zomato’s
response from both consumers and owners, competitive advantage? Discuss the
the firm plans to continue with this feature. role of feet-on-street model in the
Zomato Treats, the latest concept launched in
3. How have acquisitions facilitated in
June 2017, treats subscribed users with free
flourishing Zomato’s online ordering
desserts. Users who have been loyal to the
firm are invited for a low-fee Zomato Treats
4. Discuss with examples some of the
membership; each time they place an order
key features of Zomato’s e-
with the partnering restaurant, they receive a
commerce services. How do they
complimentary dessert for free. They firm has
differentiate the firm from its
seen increased repeat usage that is a 25%
increase in order frequency from the users
who have already received the free dessert
through this program. The company is
working on increasing revenue profitability
and reduction in inefficiency. Even in its
international operations, Zomato is focusing
on a few key markets and slowly expanding to
reduce cash burn. And the company is a firm
believer in the use of technology to sustain
growth and reap profits.


2. http://tech.economictimes.indiatime

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