Business Case Study "Zomato"
In his recent post on startups, Kunal Shah, the founder of FreeCharge and CRED, emphasised the importance of creating a sustainable and scalable business model for startups. He stressed that startups should focus on generating revenue from day one and not rely solely on funding to sustain their operations.
So here is a business case study about one of India's unicorn food tech startup Zomato.
Zomato is one of the largest online food ordering and delivery platforms in India. Founded in 2008, the company has now expanded its operations to 24 countries worldwide. In this blog, we will discuss Zomato's business and revenue model, which has made it one of the most successful companies in the food tech industry.
Zomato's business model revolves around connecting customers with restaurants and food outlets through its online platform. The company's platform allows users to search for restaurants, view menus, place orders, and make payments online.
Restaurant Listings and Advertising
Zomato's revenue model is primarily based on commission fees earned from restaurants for orders placed through its platform. The company charges a commission ranging from 7% to 15% on orders placed through its platform, depending on the restaurant's location, size, and other factors. However, the online food delivery only contributes a low percentage of income compared to other revenue streams because of the huge competition and the need to provide huge discounts. Apart from commission fees, Zomato also generates revenue through advertising. The company offers advertising services to restaurants, food chains that includes sponsored listings, promoted posts, and display advertising on its platform.
Similar to its advertising services Zomato offers consultancy services as well. Zomato based on the food order and delivery data has the capability to predict what food would sell better in which areas, this can help restaurants know how they can grow their business by selling the most ordered foods in their areas they serve and to customise their menus.
In addition to commission fees and advertising revenue, Zomato also generates revenue through its premium subscription services. The company offers a subscription service called Zomato Pro, which provides users with exclusive discounts, deals, and other perks at select restaurants.
Zomato has also diversified its revenue streams by entering new verticals such as online grocery delivery, cloud kitchens, and restaurant tech solutions. The company's recent acquisition of Uber Eats' business in India has further strengthened its position in the online food delivery market.
Zomato's success can be attributed to its innovative business and revenue model, which has enabled it to capture a significant share of the online food ordering and delivery market in India. The company's focus on customer experience, technology, and partnerships with restaurants and food outlets has helped it establish a strong brand presence in the industry. By diversifying its revenue streams and adapting to changing market trends, Zomato has been able to establish itself as a leader in the food tech industry. Startups can learn from Zomato's example and focus on creating a business model that is sustainable, scalable, and adaptable to changing market trends.