ZOMATO BUSINESS MODEL

"How ZOMATO works?"

By- Pratyush Kumar Shekhar   Email Id-shekharofficial311@gmail.com

Guys food is older than civilisation. Agrarian cultivation dates back 5,000 years. The first hunter gatherers were foraging for food 2 million years ago. It is now the most important part of the global economy and is estimated to be about 20% of global GDP.
A new market of Quick Service Restaurants have developed in our country. It had it's start a long ago but today it is a 51,000 crore rupees industry. Zomato is something that don't need any introduction. Doesn't matter which generation you are,what is your age? Before we begin let's see some amazing facts about Zomato.
1. Zomato receives 1.25 million food orders on daily basis on an average.
2. Zomato have 80 million monthly active users.
3. Zomato adds a new restaurant every 30 second.

A LITTLE INFO ABOUT ZOMATO:

Zomato is a Food Delivery Company which delivers food ordered online by the app users. Zomato works on an aggregator model. Zomato charge 20–25% in commission from the restaurant for every order.

Mission:"Our mission is to ensure nobody has a bad meal"

Vision:"We want to be the ‘Google’ of food. Our vision is to be the global platform when someone is looking for food locally."

Tagline: "Discover great places to eat around you."

Zomato was established by two IIT Delhi alumnus, Deepinder Goyal, and Pankaj Chaddah.

Deepinder graduated with a Mathematics and Computing degree from IIT Delhi in 2005 and Pankaj graduated with a degree in mechanical engineering from the same college in 2007.It all started in the cafeteria of Bain & Company, Deepinder saw people standing in a queue demand for paper menu of different restaurants, to order food. That’s when he thought of converting these restaurant paper menus into a digital app.They launched a food directory service company named “Foodiebay”.They both started scanning all the menu items in the restaurant and listed it on an intranet website.After seeing huge traffic to the site, they decided to launch their site publicly in the year 2008. After launching the website, they started listing restaurants in Delhi NCR. On November 2010, "Foodiebay" changed its name to Zomato. The Zomato users’ number got tremendously increased in 2011 when the company introduced its app (Zomato App).They posted hundreds of restaurant menus, reviews of eating joints and recommendations.Soon after its success in Delhi-NCR, the company expanded its services to high-tech cities like Pune, Ahmedabad, Bengaluru, Chennai, and Hyderabad.By 2012, Zomato had started expanding overseas by extending its services to Sri Lanka, UAE, Qatar, South Africa, UK, Philippines New Zealand, Turkey, and Brazil.

ZOMATO BUSINESS MODEL:

Zomato started its business as a restaurant search service provider.
Earlier it used to scan menus of different restaurants list them on their site and the menu was reviewed by the people.But now it has changed its business model a lot and added multiple services in it which led it to be a unicorn startup of India.

It's just surprising that currently,Zomato earns almost 70% of its revenue by putting restaurants ads on its site (just like Google and Facebook).Online food delivery contributes to a low percentage of income compared to other revenue streams.Now, Zomato has added multiple services and has multiple sources of income.Let’s have a view on different revenue streams of Zomato and how it is making millions?

1. Zomato Advertisement:

Zomato generates 70% of its revenue from advertisements. Zomato allows restaurants to put their banner on their site to get better visibility and a large view. Zomato provides people, access to multiple restaurants and allows them to rate the quality of the services that these restaurants offer.

2. Zomato Subscription:

Zomato has a huge amount of database and a great analytical tool. What a customer wants to eat, which food is more in demand, what the consumer is searching for, what they are not searching for and which dish gets maximum orders. Zomato knows all this information of consumer and their reviews also.Restaurants pay a certain amount of money to Zomato in exchange for these analytic tools and services provided by Zomato. This is very helpful for restaurants since they all information about consumer behaviour. They may alter their services according to the needs of the consumer. Zomato Subscription will help the restaurant to increase its food orders and to get better reviews from consumer.

3. Zomato Food Delivery Services:

Other sources of revenue for Zomato include Online food delivery service. Zomato charges 20–25% in commission from the restaurant for every order and provides home delivery services. Zomato started as a restaurant search service but further, it realised that the market for online food delivery is on a rapid rise in India. Therefore Zomato started its online food delivery services.Up to 2019, Zomato Food Delivery Services did not contributed too much to the total revenue. But the commission earned due to delivery services constituted about 75% of the total revenue generated in the year 2019. This is equivalent to an estimated amount of $155M, almost four times more than $8M made last year.

ZOMATO REVENUE:

Zomato has increased its revenue to $206 million for the fiscal year 2019, from $68 million for the previous year. Zomato Delivery Service revenue for FY19 is $155m compared to $38m in FY18 (4x annual growth). It now contributes ~75% of total revenue, up from ~55% in FY18. Deepinder Goyal, Co-founder and CEO of Zomato has a net worth of $271m(Rs.1900 crore).

ZOMATO MARKETING STRATEGY:

1.Focus on technology:

Zomato has created a user-friendly Website, great UI design, cross-platform app.The speed with which the website opens and the mobile application is also extremely fast and extremely easy to use, even for a novice.

2.Innovative Schemes:

Zomato offers exclusive offers on food items. Zomato launched ‘Zomato Gold service’ which led to a high increment in its customer.Other schemes such as BOGO( Buy One, Get One) and 2+2 complimentary drinks also impressed customers.

3.Promotion:

Zomato invested a lot in advertisement. Zomato became popular among people through social media marketing.

4.Collaboration:

Zomato has Uber, Paytm, Paypal and multiple food bloggers as its collaborators. This will help Zomato to improve its services.

FUTURE OF ZOMATO:-

Zomato is one of a pioneer of food startups in India. With its unique business model, it had managed to remain a top player in the market. Zomato is providing great services at an affordable price.

India’s food-tech market was expected to grow to $5 Bn in 2019, and by 2023, it is expected to cross $15 Bn. Zomato is performing well in the market and seems to have a bright future.

As founder and CEO Deepinder Goyal wrote in a blog that "the food delivery business is set to grow phenomenally and estimates that about 200 million people in India will order food from Zomato about 5 times a month, with the top 20 million cohort amongst these ordering more than once a day, proving that domestic consumption in India is growing. However, India is a market is unique – companies that innovate and adapt will earn the right to serve the millions of India."

Guys since this is a business model,I am sorry if any mistakes are there. Also I am not an expert in this field but i tried my best to bring accurate and correct information among you all. Kindly give your valuable feedback in the comment section that whether you liked it or not. 

If you want to further read on this topic kindly refer--ZOMATO BUSINESS MODEL

Answer on QUORA
Zomato ANNUAL REPORT FY-19--https://www.zomato.com/blog/wp-content/uploads/2019/04/Zomato%E2%80%93Annual%E2%80%93Report%E2%80%93FY19.pdf