Restaurant search and discovery platform Zomato stays successful by eyeing different aspects of the online food and restaurant business. The team has worked towards changing Zomato from just a search and discovery app to a product platform that can be integrated across different verticals of the business becoming a platform that brings together food suppliers, restaurants, consumers and logistics partners.
Founders believe that the online ordering market will receive 40-50 million orders per day as they build the market.
Zomato believes it has the ability to cross-sell its several offerings to a customer bringing a high chance of success at capturing them at any point of the food chain. Customer-acquisition cost is lower compared to others due to the advertising/listings business. The platform sees 22 million users come on board every month who haven’t tried the delivery service yet.
Every month, about 5% (of new users) try out delivery and that is a no-cost acquisition. So, food-delivery is not a standalone business.
This year, both firms Swiggy and Zomato have doubled down on spending for a captive delivery fleet, mass marketing, discounts for customer acquisition, incentives to gain captive restaurant supply and senior management hires.
It is a trade-off between scale, unit economics and availability of capital. Zomato regards itself as a food tech company and not a logistics company. They do logistics in order to be a better food-tech company and give their customers a superior experience and gain synergy while launching new products such as Zomato Gold.
After multiple experiments with several subscription programmes across businesses such as Zomato Treats, which has been discontinued, and Piggybank for food delivery, Zomato is considering rolling all loyalty and subscription-based perks into Gold, thus dissolving the differences between dine-out and delivery-based incentives for customers.
While Zomato’s diversified plan helps to tap customers, on the supply side the company is looking to incentivise restaurants to be loyal to them. This has come in the form of the sourcing business called HyperPure, which attempts to resolve the difficulties of a supply chain in the area of food procurement.
Through HyperPure, Zomato sources pesticide-free clean ingredients including meat, vegetables and consumables for restaurants. This drives quality perception, which in turn would drive core demand.
If quality perception improves, demand goes up. If demand goes up,they make more advertising revenue, food-delivery revenue and more Zomato Gold revenue. It’s the ability to plan long-term with a wide lens on innovation that appeals to investors.