The Product Tales— Zomato

The Product Tales is a blog series that aspires to encourage readers to dig deeper into the digital products which one may come across on a daily basis. The blog’s objective is to highlight the end-to-end thought process behind the business model of these products so that the reader gets a root-level understanding of the same.

About

Zomato is one of the biggest online food ordering platforms in India and in 22 other countries across the world. People eat almost 90 million times every month and this is a contributing factor in the revenue stream of Zomato. Zomato and Swiggy were battling it out in the fiercely competitive food delivery market until COVID happened. With most of India’s restaurants shut due to the lockdown, both the food delivery unicorns had to pivot by entering the hyperlocal delivery market.

My analysis of Zomato’s business model and app features would mostly consider its business offering in the pre-COVID era. Some features that have been included recently have also been covered in this article

Business Model Analysis

• Restaurant Listings: Zomato was just a listing platform and a restaurant directory. This brought in advertising revenues from restaurants that joined the platform. Extending this further after the launch of food delivery and restaurant reservations, Zomato now charges commissions from restaurants to be placed prominently on the feed. Restaurants can pay to have their events or offers promoted as well as their overall banner, which brings improved visibility and conversions from Zomato users.
• Food Delivery: Zomato charges a commission to the restaurants on the basis of orders. While users pay a delivery fee, Zomato earns through restaurants who pay a commission for each delivery, which is then split among the delivery partner and the company. Commissions from restaurants vary based on whether Zomato is fulfilling the delivery or whether the restaurant uses its own riders. This is said to contribute in a small way to the company’s total income due to huge competition and the need for deep discounts etc.
• Loyalty Programs: With Zomato Gold for consumers and users, and subscription solutions for restaurants, Zomato opened up a steady stream of revenue. While users pay a subscription fee to access the Zomato Gold loyalty program which brings exclusive offers, restaurants also pay a monthly fee to be part of Zomato’s bouquet of offers. Restaurants also pay Zomato a monthly fee for miscellaneous services such as live tracking, Zomato-branded tamper-proof packaging, and more.
• Live Events: With Zomaland, Zomato entered the branded live events market last year. Zomato charges users an entry fee to attend Zomaland, where besides food, they can witness live musical performances and other acts. In 2018, it had organized the entertainment carnival in Delhi, Pune, and Bengaluru, where Zomato claimed over 100K people showed up.
• White Label Access: Zomato also enables services such as Zomato Whitelabel under which they give offers to the restaurants to develop a customized food delivery app. It also works with cloud kitchens and restaurants for consultancy services. Zomato works with select restaurant operators to help in identifying locations for expansions at a minimal fixed cost, but with increased options for the user. It provides the requisite licenses and operational enablement for such restaurant partners.
• Zomato Kitchens: In order to be able to provide kitchen infrastructure services to select restaurant operators, Zomato works with entrepreneurs to set up and operate Zomato Kitchens under different labels. This helps entrepreneurs fund restaurants in the right location with an investment of INR 35 Lakh and more. Zomato claims it offers returns in the range of INR 2 Lakh to INR 4 Lakh per month to the investors, with 180+ affiliate kitchens already up and running.
• Zomato Originals: All Zomato Original shows are around food but with a twist. Comedy, reality, fiction, advice, celebrity interviews will explore food in unique, engaging, and entertaining videos. Available in the “Videos” tab in the Zomato app, videos will be categorized by genre letting users watch 3–15-minute videos across shows, recipes and Sneak Peek restaurant stories.

Customer Segments

The segmentation has been done based on the various stages of life that a consumer goes through.

Segmentation Variable: Age

If we list down the prominent B2C features and map their usage among the customer segments, we get the following table:

Feature Benchmarking

Since the online food delivery market has 2 prominent players, I have performed a competitive benchmarking of the Zomato app’s features with that of Swiggy. (I have considered only the delivery part of the Zomato app)

The 2nd part of the analysis: Coming Soon!!

Please feel free to give your feedback on this article :)

#Zomato #Swiggy #Apps #Products