Zomato: The First and The Largest Food Tech of India
Hello and welcome or welcome back to my blog. So, today‘s topic of discussion will be the eighth unicorn of India which is “Zomato”. We all know about Zomato. I mean who hasn’t ordered his/her meal at least once in the lockdown when we were all locked in our houses and when all the restaurants and cafes were shut down? Everyone isn’t? So, starting off with Zomato, first of all, we will be talking about the company, then we will be proceeding ahead according to the structure of my regular content along with its exciting backstory of how Zomato became a unicorn and other amazing facts about it.
About the company and its founder(s):
Zomato is an Indian multinational restaurant aggregator and a food delivery company that was founded by Deepinder Goyal and Pankaj Chaddah in 2008. It connects the customers, restaurant partners, and delivery partners. It provides restaurant information, menus, customer-generated reviews of the restaurants, views, and uploads of the food/restaurant photos, food delivery, and even table reservations for dine-outs. Zomato’s services are now available to 24 countries and over 10K cities.
History of Zomato achieving the Unicorn status:
The alumni of IIT Delhi, Deepinder Goyal, and Pankaj Chaddah founded Zomato which was formerly known as FoodieBay in 2008. The idea of it came to them when in their office they came across the issue of people waiting in a long queue for their turn to come from a long time, just to get a glance at the menu card to order food for themselves. Zomato initially, started off as a digital menu organisation and uploaded soft copies and pictures of the menu cards of different restaurants. People in Deepinder’s and Pankaj’s office slowly started using their website to glance at those menus. Since then, it started booming profoundly. So, Deepinder and Pankaj expanded their business in order to make it available to everyone possible. Soon, the start-up got rebranded as Zomato from FoodieBae in 2010. The prime reasons to change the brand name were, first, to avoid a potential naming conflict with an American multinational e-commerce company, “eBay”, second to make it simpler to memorize for brand recall, and also, they were not sure whether they would “just stick to food” or not.
In 2011, it got expanded across India including Mumbai, Delhi NCR, Chennai, Bangalore, Pune, Hyderabad, and Ahmedabad. By the next
year, (that was in 2012) Zomato expanded internationally covering its operations in countries like UAE, Qatar, the UK, South Africa, Sri Lanka, and the Philippines. Further, in 2013, it launched its services in New Zealand, Turkey, Brazil, and Indonesia. Also, availing its services on apps and websites in Turkish, Portuguese, Indonesian, and English languages. In 2014, Zomato launched in Portugal, followed by the launches in 2015 which were in Canada, Lebanon, and Ireland.
Seeing the constant rise in the user base of the Zomato website, the founders decided to build an application for Zomato. Now, by this time, there have been 11 million app downloads across android and iOS, and 70 million active users monthly.
In 2010, Sanjeev Bikhchandani, the founder of the notable Naukri.com got captivated by the performance of Zomato in the market and decided to invest in it. This was the very first funding that Zomato got, and further, it holds many notable fundings, out of which Sequoia Capital is one of the most notable investors. Also, as of now, Info Edge (India) Limited is Zomato’s largest shareholder holding a 15.23% stake.
Talking about the company’s unicorn success, the company aced itself in digital marketing making it potentially visible to the people through its strong presence on social media platforms. The company’s strategy to attract individuals belonging to the age group of 18-35 years also affected the company’s growth in popularity because the people of this age group have easy access to mobile phones and they like to eat out.
In September 2015, with a valuation of $5.5 billion, this food tech startup became a unicorn.
The Founder’s share in the Company:
Deepinder Goyal holds a 5.5% stake in the company as of today.
Acquisitions by the Company:
The following are the notable acquisitions by the company year-wise:
Blinkit TongueStun Runnr
Acquired for Acquired for $18M Acquired for $40M
$4448M (2018) (2017)
(2022)
TechEagle Sparse Labs Nextable
Innovations Amount undisclosed Acquired for $52M
Amount (2016) (2015)
undisclosed
(2016)
MapleGraph Urbanspoon Lunchtime and Obedavot Amount Acquired for $50-$60M Acquired for $3.25M
undisclosed (2015) (2014)
(2015)
Cibando Gastronauci Menu Mania
Amount Amount undisclosed Acquired for $50M undisclosed (2014) (2014) (2014)
Investors and their Investments in the Company:
Below is the table of the number of investors invested in Zomato along with the investment amount:
Current Market Valuation of the Company:
As of today’s date, $4.6 billion stands to be Zomato’s market capitalisation which is below its last valuation ( of $5.5 billion) before going public for IPO.
Competitors:
Zomato has a number of strong competitors and those are the following:
UBER eats Swiggy DoorDash
GrubHub Deliveroo Postmates
ChowNow Slice Onfleet
UrbanPiper
SWOT Analysis of the Company:
Strength-
Just like any other unicorn, Zomato also had its first mover advantage of being the first one to provide food delivery and other related services in India. Over the course of time, due to its strong marketing on social media sites, it developed a customer base of over 90 million customers.
Zomato’s user-friendly application is also a plus as its easy-to-use app outdoes all the other directories or restaurant evaluations. It has also bagged several awards for its outstanding interface which is user-friendly.
Zomato’s brand building is greatly contributed by its strong connections with different restaurants and pubs. It receives daily feedback from both customers and the restaurant personnel.
As mentioned before in this blog, being Zomato’s digital marketing strong, it has a massive number of followers on various social media platforms. It keeps them updated on social media with its latest offers and discounts. In fact, the ads created by Zomato are so creative and fascinating that it instantly creates a connection with the customers.
Zomato’s strong funding from big investors like Info Edge Limited and such has also helped the company to establish and expand its business across various nations.
Evergreen nature of the Restaurant industry makes Zomato’s business model the strongest to sustain the market.
Weaknesses-
The increased and cut-throat competition from other emerging food delivery or directory apps is one of the prime reasons for its weakness.
Zomato has expanded to 24 countries in its last ten years. It could have been better in it given that it has very strong funding.
Zomato has been into some serious controversies like facing data breaches. There have been cases of 17 million users’ data being at risk due to data breaching.
Opportunities-
Zomato has already established itself in various countries but it still needs to cover other parts of the world as well, like other countries in Africa other than South Africa, the rest of Europe other than the UK or Portugal, Malaysia, and other South Asian countries and so on. Zomato has great opportunities to enter the entire European and
African Countries as it has already entered the biggest countries on those continents.
Its target audience of a younger age group and the increment in the usage of smartphones in them provide a strong opportunity to pool in as many customers as it wants. Also, the pandemic has pushed the platform’s growth in the market.
Zomato can partner with many of its competitors as there are many emerging companies like Zomato in the race.
Threats-
The easy-to-replicate business model of Zomato makes Zomato vulnerable due to this reason spite of Zomato being the very first one to launch as a food delivery business, there have been a number of food delivery companies in the market today like Swiggy, DoorDash, etc.
Zomato’s controversies like a data breach, identity theft and etc have made government put up new policies and regulations for these internet flatforms, which affects the smoothness and a steady flow of the business.
Future of the Company:
Zomato enjoyed a great boom being the first food directory and delivery company. Being the first ever food tech company in the Indian market it has contributed as well as got in return a lot like its popularity in the Indian and international markets. But quick success comes with some repercussions. In the first quarter of this year, Zomato reported a loss of $3597 million (INR 359.7 Cr) and if we compare it to the loss of the previous year which was $1342 million (INR 134.2 Cr), we get to see a great difference of $2255 million (INR 225.5 Cr). Due to this stupendous downfall, a large number of investors exited the company who had previously bought Zomato in the IPO. “The fall of Zomato stock from its all-time high means investors are losing confidence in the business model and there is low confidence in the promoters who have failed to perform what was said at the time of IPO process,” Prashanth Tapse, senior vice president of research at Mehta Equities, told in an Inc42 report. On the acquisition of Blinkit Tapse says “A loss-making company acquiring a loss-making, pure-play quick commerce company for making it a profitable operational metrics in the long run.”
However, Zomato owns a business that has an evergreen nature. Also, Zomato has all the characteristics of a new-age tech company like
scalability, inherent profitability, and profound management quality along with a strong marketing and advertisement strategy that aims to transform the eating habits of the large Indian consumer base. Further, paving its way to high and profitable growth in the upcoming years.
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