Zomato Business Model & Growth Strategy

Zomato: Introduction

• It allows users to order food from a wide range of eateries and have it delivered anywhere.

• Recently, Zomato ventured into the grocery and quick commerce space by acquiring Blinkit, offering up to 25,000 unique SKUs in select locations.

Zomato’s Moat

Extensive Network and First-Mover Advantage

Defining Reliability

• Availability: Ensuring products are available at all times.

• On-time & Quick delivery: Offering quick and predictable delivery. This is evident as they have an average delivery time of 12.5 minutes with approximately 75% of orders are delivered within two minutes of the promised time.

• Additionally, the company boasts an item fulfillment accuracy rate of over 99% thanks to their large assortment of SKUs.

Customer Willingness and Profitability

Strong presence in Northern Metros

Market Overview: Let’s talk about Food

Food Services Market

• online delivery aggregators,

• quick commerce restaurants,

• cloud kitchens and

• other traditional forms of eat outside food.

Quick Commerce Market

How Does the Online Food Delivery Business Work?

1. Restaurant to Consumer: This is like when you order directly from Domino’s or McDonald's.

2. Platform to Consumer: Ordering food from Domino’s via the Zomato App.

• 📱 Platform: The tech that makes it all happen.

• 🤩 Customer: That's you, the one ordering the food.

• 👨🏼‍✈️ Delivery Partners: The folks who bring the food to your door.

• 🏨 Restaurant: Where all food comes from.

Competition Level

• Quality

• Assortment

• Affordability

• Accessibility

Delivery time. The lower the time of delivery, the higher the accessibility.

The cost of the food. The lower the cost of food, the higher the affordability

The number of restaurants/food choices offered. The more the number of restaurants, the higher the assortment.

The number of restaurants providing food with high-quality ingredients. The more the number of such restaurants, the higher the quality offered.

Market Share

Zomato Revenue Model

• Gross Order Value for Zomato’s B2C operations, including food delivery, quick commerce, and dining-out, surged by 48% YoY, reaching ₹47,918 crores.

• Profitability:
• Quick Commerce: Achieved profitability in Adjusted EBITDA starting March.
• B2B Segment: Experienced a significant reduction in losses.

Streams of Revenue

1/ Food Delivery

• Zomato supports the third pillar of its marketplace with a robust network of delivery partners, ensuring that your food arrives within the promised time frame.

Gross Order Value (GOV) = ₹32,224 crores.

• Type A: Orders where the restaurant handles delivery. Zomato only transmits the order and provides support if issues arise.

• Type B: Orders where Zomato’s delivery partners handle the entire delivery process on behalf of the restaurant.

1. Platform Fee: Zomato charges a fixed platform fee per order, which is ₹6. This fee contributes directly to Zomato’s revenue.

2. Delivery Charges: The delivery partner fee includes:
• Base Fee: ₹36 per order (₹32 per order + ₹2 per km). Zomato earns this amount from the delivery charges.
• Small Order Fee: ₹15 for orders under ₹150, adding to the revenue from delivery charges.

3. Restaurant Commission: Zomato earns a commission from restaurants, ranging from 18% to 25% of the item price. This commission is a significant revenue source.

1. GST and Packaging Costs:
• GST on Item: 5%
• Packaging Charges: 5% - 7% of the item price plus GST on packaging charges.

2. Delivery Partner Fees:
• Base Fee and Small Order Fee are paid to the restaurant delivery partners, which Zomato needs to cover.

2/ Going-Out: Dining Out & Zomato Live

• Dining-Out 🍝

• Zomato Live 💃🏻

• Exclusive Offers for Customers: By paying dining-out bills through the Zomato app, customers gain access to exclusive offers and discounts, enhancing their dining experiences.

• Measurable ROI for Restaurants: Restaurants benefit from measurable returns on their marketing spends, with the flexibility to customize offers in real-time, ensuring they can effectively reach and attract their target audience.

• Tap into Growing Demand: With a rising interest in outdoor entertainment, Zomato Live caters to this demand by providing a platform for discovering exciting live events.

• By integrating event discovery with dining options, Zomato Live enhances the overall "Going-Out" experience, offering customers a seamless journey from dining to entertainment.

• The previous edition of Zomaland was a resounding success, attracting over 175k attendees, featuring participation from 400+ restaurants, and hosting 90+ performances, showcasing the immense potential of this segment.

Gross Order Value (GOV): = ₹3,225 Crores

3/ Quick Commerce: Blinkit

• Wide Assortment: Blinkit offers a diverse range of products, tailored to local preferences, ensuring that customers can access a comprehensive selection of items.

• Ultra-Fast Delivery: Products are delivered in <15 minutes, made possible through a network of dark stores strategically located within a 3 km radius of customers.

GOV: ₹12,469 crores,

B2B: Hyperpure

• Hyperpure focuses on serving standalone restaurants and regional chains, which constitute the majority of the restaurant supply sector in India.

• 1P Operating Model: Hyperpure operates on a first-party (1P) model, meaning it owns and manages its inventory. This model enables Hyperpure to source products directly from farmer producer organizations, traders, and brands, ensuring quality and reliability.

• Over 75,000+ outlets, currently operational in 8 cities have sourced supplies through Hyperpure, demonstrating its widespread adoption and impact on the market.

• Given that Hyperpure owns its inventory, the business is working capital intensive. This approach allows for greater control over the supply chain, enabling Hyperpure to maintain high standards of quality and service.

• Hyperpure is focused on expanding its presence and optimizing its supply chain processes to capture more market share and enhance profitability. The company aims to leverage its scale and expertise to deliver superior value to its B2B customers.

Zomato’s Growth Model

Goal: Increase its revenue from ₹6,000 crores to ₹8,300 crores within 12 months 💫

By joining the membership, you can tackle growth challenges organically and connect with professionals across business, marketing, product, and more. Our structured approach can help you scale your revenue and expand your market share. Become a member today!

Ideal Customer Profiles

Aspiring to become a design lead and later start her own agency, Maya is a 20-year-old student from NIFT Bangalore. She stays in the college hostel and loves the vibe there. The only thing she hates about her college is the mess food :( and being a foodie, this disappoints her a lot. She spends her time on Instagram, Snapchat and Discord, and her newly found hobby of playing the Ukulele. New to Bangalore city, she wishes to try as many food dishes as possible, but it gets very difficult considering the daily routine and college assignments. She recently started a side internship and now fulfils her food cravings with online food delivery. A little worried about spending, she always orders when the discount is at its best. She also tries not to repeat the same food item or hotel again and keeps exploring. Her roommates also chip in often, and they all share their online meals. Maya has a ‘to-eat in Bangalore’ list and is often sure about what to order, but choosing the restaurant is always confusing. Zomato ratings at her rescue, and she orders from the one with the highest rating and lowest cost (tough combination to find!).

New to Mumbai, Naveen is a 25-year-old graduate who goes to the office for work and does WFH sometimes. Working as a Performance Marketing Manager in a recently funded start-up, he stays with a couple of flat mates. Loves going out on the weekends. Apart from work, he spends most of his time reading and watching movies or series on OTT platforms and, obviously, on social media. Likes to scroll Instagram and YouTube, stays away from Facebook, Discord and Snapchat. He has subscribed to a tiffin service which delivers every day except Sunday to his office and home. Bored of eating the same tiffin food every day and since cooking is never an option (he hates cooking😐), Naveen skips the tiffin sometimes and looks for options to order online. Maybe a burger or noodles or biryani. He has recently come across online food delivery and loves exploring the apps looking for discounts and the shortest delivery time. Many times, he opens one of these apps to explore the menu and order that food dish which looks delicious and tasty. He feels it is confusing to finalize a dish but eventually ends up doing it after 15-20 mins. Oh! and he goes to the gym, so he tries to eat as healthy as possible.

Customer Acquisition

Content + Engagement = A flywheel of traffic to Zomato pages.

Profitability: CAC:LTV ratios are a core constraint for Zomato and we will aim to maintain the ratio. The CAC for Zomato has increased from Rs. 52 to Rs. 150 over the past 2 years. Our aim is to maintain CAC at Rs. 150.

How do we plan to solve this?

Revamped creative strategy: We will move from the existing boyish meme-marketing play into a “Red bull of food” play. We will drive an emotional connection with our audiences and be part of the larger food content universe.

Why should we revamp our creative strategy?

The romance around food is one of the primary reasons why we are driving this strategic change in communications from just being a meme page on social media handles to be the ‘Redbull’ of food.

 

(A) On Instagram, food is an extremely popular theme, along with travel, fashion, and cosmetics. 69% of millennials take pictures or videos of their food before eating. Both the Facebook and Instagram platforms are highly relevant for capturing this population. (source)

• Food lovers consume four times more content than the average Instagram user. Food fans connect to Instagram an average of 18 times a day.

• Each month, #food accounts for more than 250 million posts.

• 27% of Internet users on Instagram share food content.

• 38% of Instagram users view food content.

(B) In addition, Our core user insight to solve here is that users think of Zomato as a transactional platform despite the food being such an emotional connector. Besides, being a meme page on Socials only solves short-term engagement. As such, the current brand association remains that of a casual, transactional platform that posts funny memes from time to time.

 

Solution: Our solution involves “growing up” to encapsulate more wholesome content, and form better emotional connections with our users. We will tackle content strategy across the following key pillars to change our brand voice:

1. Being inspirational: Campaigns around Feeding India, ESG initiatives and End of Year reviews(like Spotify Wrapped) for our users. So far, Feeding India has not had significant visibility across socials and PR. We will add Feeding India to our Brand communications and voice to enable customers to form a deeper bond with Zomato’s mission.

2. Being Intimate and participatory: Campaign shift toward product hooks like Zomato Social. Eating food is a highly social activity and has high emotional value. Integrating Zomato Social-level recommendations and showing the CVP to users will enable Zomato’s perception to be more participatory and friendly.

3. Being Visual: Zomato does a great job with visual design. However, it restricts itself to memes and standard ads. We will incorporate the same visual design in the incremental action we undertake.

New product hooks: We will drive a series of campaigns around our product hooks (Zomato Social, Zomato Apron and Zomato X) to drive high-intent acquisitions to drive 40% of acquisitions through these hooks. Our campaigns will be aimed towards attracting high-intent users that will maintain or improve activation and retention rates.

What currently works across channels?

Twitter: Zomato receives an average of 2,928 likes and 309 retweets on its posts (Source).

Strategy: Zomato has a habit of making witty remarks on Twitter. If you scroll through its Twitter profile, you will see Zomato adopting a counter-intuitive marketing strategy by asking people to do something against what they stand for. The brand has been going against the tide and challenging itself to walk on this not-so-normal path of marketing, evidently seen in the Zomato Twitter strategy.

 

Let’s see examples of How Zomato Tweets attract attention!

In July 2019, in a viral tweet, they asked their user base to order less and eat more home-cooked meals.

Guys, kabhi kabhi ghar ka khana bhi kha lena chahiye

July 3, 2019

 

Why it worked?

• Reverse psychology is an incredibly powerful tool, and customers were probably even more tempted to order food.

• The timing was right - it was bang in the middle of the World Cup, where, as per the norm, people were ordering food even more frequently than usual.

 

The effect of ‘Kabhi Kabhi was so much that it caught the attention of brands like Amazon Prime Video, ixigo, YouTube, Mobikwik, Smirnoff, Behrouz Biryani, TVF, and more, where they were soon enough seen joining the bandwagon and recommending people to do the opposite of what their services stand for.

Instagram - meme marketing paradise

At one point, Zomato’s Instagram bio said, “Meme page…occasionally posting brand posts due to business team pressure.” Currently, it says 10% brand page, and 90% meme page.

 

What is currently working:

• They use meme-marketing at its best. Engaging content & reels with funny scripts with “counter-intuitive marketing”

• User-generated content and a huge following on #zomato and #zomatoIndia (75K user-generated posts)

• Weekend giveaways among the audience

• Influencers collaboration to post content on Instagram

Zomato’s feed in-one glance:

 

A usual giveaway contest and engaging post on Zomato’s Instagram look like

Zomato on Instagram: "surprised that this wasn't the biggest order in india 😂"

Zomato shared a post on Instagram: "surprised that this wasn't the biggest order in india 😂". Follow their account to see 2520 posts.

https://www.instagram.com/p/CYDvFFcpUG9/?utm_source=ig_embed&ig_rid=c2d47f70-8291-4d9a-82ce-453f3b4902a6

 

Weekend giveaways

 

Youtube & Influencer marketing strategy

Like IG, Zomato teamed up with some of the top influencers in the food and lifestyle industry to create fun, engaging content around food. One such example is Zomato teamed up with top influencers to play 'guess the brand' with pizzas.

- Collabs with comedians/influencers.

- Series on Delivery partners - “Humans on Zomato”

- No other major series/playlists → mostly sporadic collections.

What should be done better for Social media?

💡

Become the Red Bull for food in India. Move on from only memes to brand and wholesome content. Food avengers assemble! Food (not football) is life! We live, breathe and talk food.

 

What is not working?

→ Low frequency of posts across Youtube and Facebook → resulting in low reach.

→ Opportunity to move beyond meme marketing into capturing their ethos - better food for more people.

 

Why should we change the strategy?

→ Meme marketing solves for engagement for a specific dopamine-addicted audience, typically from 18-25, on Instagram and Twitter only. This strategy does not help on Youtube.

→ Meme marketing caps the potential reach for Zomato and ICP, while Zomato’s use case is much broader for a wider audience.

→ Food is a naturally engaging medium (#food has 250M posts) and is a core value prop for Zomato.

→ This will increase the potential reach for existing ICPs and followers across Instagram and Youtube.

 

Revamped content strategy:

Let's look beyond memes, we will focus on the following:

• Entertainment (30-40% of posts): become the BRAND NAME as a food content. Besides memes, food preparation and new food trends have very high engagement. People love engaging with content about creating different foods like real-looking cakes, cheesecakes, unique ingredients, classical cooking (Italian), etc. The primary objective will be to help users discover and re-discover food. Example: Street-side vendor making a unique sandwich, Restaurant preparation of gourmet or deconstructed dishes, top trends in food.

• Aspiration/Discovery (30-40% of posts): become the go-to place for every food-related question - be it where should I plan my next date? Where can I find good and affordable eating outlets in this new city? Restaurant discovery across top Indian cities. The primary objective will be to help users discover great food and restaurants nationwide. Example: Top 10 pizza places in suburban Mumbai.

• Educational (10-20% of posts): Nutritional content for healthy eaters. The primary objective is for users to understand the typical nutritional benefits of healthy food and restaurants across India. Example: How many calories does a typical meal have? Health benefits of the Zomato meal subscriptions, Healthy dishes to order to balance your diet.

• Promotional (10-20% of posts): Giveaways and first-order discounts to drive acquisitions and CTRs.

• User-generated content across the above: We will rely heavily on user-generated content across Restaurants and customers to keep content costs low.

 

Core channel focus:

Instagram, Youtube - High priority

Twitter - Medium priority

 

ICP focus:

Our core ICPs will be 100% of ICP 1 and 50% of ICP2. Ages 18-40.

 

Content strategy

 

Channel-wise Campaign strategy

Instagram: memes and food → Priority - High

At present- 10% brand page… 90% meme page…

Future plan - 100% food page

 

Goals: Double followers from 750K to 1.5M; Increase monthly potential reach from 21M to 30M.

Content formats: a) Posts - Continue BAU b) Stories - Continue BAU c) Reels - Increase frequency by 2x.

 

Youtube: food is life! → Priority - High

Goals: Increase followers from 250K to 1M; Increase monthly potential reach from 11K to 1M.

Content formats: a) Videos - Increase frequency b) Shorts - Increase frequency

 

What are we planning differently on the creative front?

Campaign #1: Restaurants and food guide (#food has 250M posts)

Channel:	Youtube, Instagram and Twitter
Goal:	Increase followers and reach
Content format	Reels, Youtube videos, IG TV and Twitter threads.
Objective:	Create a wholesome space for food lovers to enjoy cities, restaurants and food. Subliminal Zomato messaging for users to connect food lovers with Zomato. Create a happy sentiment around Zomato.

 

 

Campaign examples:

1. The Street Show: Reels on roadside vendors making unique and fun preparations like chocolate dosa, and masala papad.

2. Restaurant-Yatra: Reels on Top 5s - restaurants across cities. Span across Tier 1 and 2.

3. Zomato top chef: Reels/videos on the top and upcoming chefs across cities. Their ethos and food prep.

4. Trending Restaurants: Carousel posts on places to eat and order this weekend across cities. (Nykaa strategy)

Campaign #2: Product Hooks - Zomato Social (critical)

Channel:	Youtube, and Instagram
Goal:	Drive app installs.
Content format	We will drive campaigns for Zomato Social. We will drive Social Proof campaigns with and w/o influencers.
Objective:	Get people talking about social recommendations on Zomato and build intrigue to get app installs.

Campaign examples:

1) Did you know? - Did you know that you can now find recommendations from your connections on Zomato? Click here to sign-up and get connected with your friends.

2) Craving something but finding it hard to order? Connect your Instagram today with Zomato and recommendations from your friends and trusted food bloggers.

3) Video ad: “How did you find out about this?” A friend is eating some delicious-looking food from an unknown restaurant. Another friend asks how he found out about this place. The friend replies by saying he found it on Zomato through social recommendations. Sign-up here to connect your Instagram to Zomato.

4) Screenshot of the app with social ordering: Post screenshots of the app to build intrigue.

5) User-generated sharing: Allow users to share screenshots or recommendations to Instagram stories and posts to build hype and content loops.

Create & Scale Food Blogs on Zomato

📈

Goal: Drive 1M visits via blogs from 10K

 

Currently

Zomato does not currently have any blog for SEO to drive traffic! 😲

• Zomato has a dedicated sub-folder for its blogs ➝ zomato.com/blog ➝ Traffic = 10.1K

• Swiggy organizes its blogs on a subdomain ➝ blog.swiggy.com ➝ Traffic = 3.7K

What could be done better?

The overall strategy is to build and scale a food blog with long-form content to push the discovery and “awareness” about Zomato on a simple google search.

Content Curation Ideas on LFC

Categories	Blog Post Ideas
Recipe	How to cook famous cheesecake with Gordon Ramsey?
Guest Blogging	Vikas Khanna X Zomato
ㅤ	“Best protein meals for the sports buff: Virat says”
Best places to eat in different cities	“10 Foods You Can’t Leave Bangalore Without Trying”
Must try places	“20 Places for Street Food in Bangalore: For all the foodies!”
Hidden gems, places to eat in the city	“8 Hidden Food Gems in Delhi You May Not Have Heard Of Yet!”
Healthy things on Zomato	“10 Cafes In Pune Serving Delicious And Healthy Food”
Best Breakfast/lunch/dinner recommendations	“Kachoris, Vadas And More: Popular Breakfast Spots In Udaipur”
Cafes curations	“Sip A Coffee, Eat Or Work Out Of The 14 Best Cafes In Mumbai”
Street food curation	“10 Best Street Food in Patna – A Detailed Foodie's Guide”
Food guide	“Vadodara Food Guide: Best Restaurants in Vadodara”
ㅤ	“Luke Coutinho’s favourite food ordering guide”
Cook Books	“Best Overall Cookbook for Beginners: How to Cook Everything”
Recommendations	“Top healthy keto meals for you to order”
ㅤ	“Top recommendations by Rujuta Diwekar (Nutritionist for Kareena Kapoor)”
Top things	“Top chefs in Bangalore”
ㅤ	“Budget guides for Bangalore/Mumbai/Delhi, etc”
ㅤ	“Top upcoming restaurants that you may not have ordered from in Mumbai/Delhi/etc”
Budget Bytes	“Best value for money restaurants in Mumbai/Delhi/etc”
ㅤ	“Visit Kolkata just for the food”

Write blogs on top keywords, food curation, restaurant curation, and recipes. Use the classic SEO strategy for restaurant listings and convert them to blog form for better curation.

 

Content collaborations on platforms like LBB, Trip advisor, WhatShot, CultureTrip

Platforms

Culture trip

LBB

Trip Advisor

whatshot

Holidfy

Curly tales

Thrillophilia

 

The idea is to collab with the platforms (LBB, Trip advisor, WhatShot, CultureTrip, etc) to add the Zomato links in the food blogs ranking on Google.

For eg: How does the food curation blog on LBB look like and how can we collaborate?

The ORDER HERE button redirects the user directly to Zomato to place the order.

Become a blogger on Zomato

The goal

• To help user to discover Zomato in the top search results

• To curate the food content on the Internet

• LFC (long-form content) always works like a charm

• For the users who land on the blog, each element/recommendation will have a link to redirect the users to place the same order on Zomato.

The homepage

Where are we adding value?

Promotional videos for Zomato Social (Product Hook)

Discovery Ads for Zomato Social (Product Hook)

This section covers the ads for the discovery of new places and the best recommendations from different parts of India - Zomato Social Discovery Play

Regional Ads (TG - ICP 02) - Zomato doesn’t have ads in regional languages on the Meta platform

A different outlook (Static + Videos)

IRCTC

Background

• Indian Railway Catering and Tourism Corporation is the only authorized entity to provide certain services to Indian railways. The primary function includes online ticket booking

• IRCTC has a total user base of 120M with 90M active users & 40k daily new registrations(Source)

 

Why it makes sense for everyone in the ecosystem

For IRCTC

• With more users that are being added every day, the mission of IRCTC is “To improve the customer services and provide facilities through the best industry practices – in hospitality, railway catering, tourism and travel.”

• IRCTC is working towards building a better UI for its web and app products but is still far behind in bringing the experience to the users close to what zomato has in terms of food ordering

So the problem to solve for IRCTC is to provide them with an already existing and credible food delivery service and restaurant network to their users and also earn a percentage of revenue from it

 

For Users

• Concerned about their breakfast, lunch, and dinner as they are unaware of restaurants or concerned about being frauded(fake MRPs) along their journey

• Limited option of items/restaurants on the IRCTC app

• Users tend to order from credible partners and hence “Dominos-IRCTC” partnership was quite successful but dominos isn’t present across all cities

So the problem to solve here is to provide the user with enough options and credible restaurants from the app and make their journey experience better

 

Features to be added on IRCTC App

Book Your Meal Section

• “x” days before their journey, a push notification will be sent to plan their meal for the journey

• Zomato will be integrated within the IRCTC app and the PNR will be fetched from IRCTC, user has to select the station and get the list of restaurant post which an order can be placed

 

Risks

• Delay in train arriving at the station which results in the restaurant not operating at the time of train arrival at the station

Mitigation

• Provide an alternative option for restaurant

• If it’s a pre-paid order then provide cashback

 

Success Metrics

Zomato

• Email/SMS Open rate

• CTR for Zomato App

• Increase in New User Acquisition

• Time b/w Successful Signup to First Order

• Increase in MTU

• Increase in number of orders

User Journey

 

 

Instagram

Background

• Instagram is a free, online photo-sharing application and social network platform by facebook

• Instagram mission statement is “to capture and share the world’s moments.” Instagram branding revolves around creating visual impressions that leave its clients with long-lasting memories

• Instagram India has at least 263.8 million active Instagram users

 

Why it makes sense everyone in the ecosystem

For Instagram

• Increase in quality content (Because high quality here incentivizes users)

• Increase in revenue via commissions

• Increase in the transactional use case for businesses

So the problem it solves here is by building behavior of posting high-quality content and increasing transactional revenue

 

For Users

• Incentive to post

• Food Vloggers are now incentivized with revenue

• Better engagement

So the problem it solves here is by incentivizing users who bring leads to a business and as a result of second order effect, improve content quality for consumers

 

Features to be added on Instagram

Integrated Zomato App which opens up on clicking “Order Now” button

• “Order Now” button will be present across IG Posts, Stories, and Page. User can use their affiliate link and attach/link it to the button.

 

Risks

• Experience Issues: Since the integrated app has a slightly degraded UI, there might be a potential for bad experience for a user

Mitigation

• Route them to the native Zomato app with a nudge or a button saying “Take me to the App”

 

Success Metrics

Zomato

• CTR for Zomato App

• Increase in New User Acquisition via IG

• Time b/w Successful Signup to First Order

• Increase in MTU

• Increase in number of orders

User Journey

PhonePe

Background

• PhonePe is a mobile payment platform using which you can transfer money using UPI, recharge phone numbers, pay utility bills, etc. PhonePe works on the Unified Payment Interface (UPI) system and all you need is to feed in your bank account details and create a UPI ID.

• The company said it processes more than 2.5 billion transactions a month and has 165 million monthly active users and in January that its user base had grown to 350 million from 273 million in December 2022

 

Why it makes sense everyone in the ecosystem

For PhonePe

• With most of it’s growth coming in from tier 2 & tier 3 cities and at 165 monthly million active users, phonepe tends to provide additional use case to it’s users (Source)

• “We are excited about the prospects in multiple verticals” as small town India is adopting digital payments way faster than metros and tier-I cities by founder & CEO Sameer Nigam

So the problem to solve for is to provide more use cases to its quickly growing active user growth

 

For Users

• Ease of use for core and power users across Phonepe in exploring other in-app services

• Challenges faced installing additional apps due to lack of storage capacity on phone (Tier 2 & 3)

So the problem to solve here is to provide the user with an option to explore the opportunity in ordering food online within the app

 

Features to be added on Phonepe

Integrated Zomato App under Switch

• Users can now tap on the Zomato logo under Phonepe Switch and avail the services of Zomato within the app

 

Risks

• Experience Issues: Since the integrated app has a slightly degraded UI, there might be a potential for bad experience for a user

Mitigation

• Route them to the native Zomato app with a nudge or a button saying “Take me to the App”

 

Success Metrics

Zomato

• CTR for Zomato App

• Increase in New User Acquisition

• Time b/w Successful Signup to First Order

• Increase in MTU

• Increase in number of orders

User Journey

 

Referral/Subscription programs run by Zomato

Zomato piggybanks 🐖

• A reward points program for loyal users of the food delivery service on Zomato. The idea behind this membership is to reward loyal users of the service.

• Every time the user orders food online on Zomato at any restaurant, 10% of your order value will be credited back as Z Coins into your Zomato Piggybank.

• Using these points, you can pay 10% of the value of the next order you place at a wide selection of exclusive top-rated restaurant partners.

✅

The company also donated Rs. 1 for every order from Zomato Piggybank customers to Akshaya Patra Foundation. According to Zomato’s email, Piggybank subscribers helped donate Rs. 2 crores and had total savings of Rs. 38 crores.

✅

As of September 2018, Zomato said it had over one million subscribers to Piggybank, while 30% of subscribers came through referrals. It also announced that over 2 million orders were placed using Zomato coins.

The company’s initial plan was to convert it into a paid subscription program at Rs 299 per year. However, this didn’t materialise.

Zomato Gold and Pro 🪙

Background

• Zomato gold started out initially in UAE and Portugal. Zomato started off the same in India with 1200+ top-rated restaurants and bars across Delhi NCR, Mumbai and Bengaluru (~Nov 2017).

• The Zomato Gold membership was priced at Rs 1,800 for a year.

• Zomato Gold grew 200,000 members in 5 Indian cities in 6 months. After this six-month period, it became an invite-only program with exclusivity (~ Apr 2018).

• Zomato Gold was turned into Zomato Pro and made it bigger than Gold, better all-encompassing membership that unlocks amazing privileges and discounts at the best restaurants across dining out and delivery.

• The Zomato Pro membership was initially priced at Rs. 750 a year.

Number of Zomato Gold restaurant partners: 6500

Number of Zomato Pro restaurant partners in India: 25,350

• Referral for Zomato gold - You get 10% off on your Zomato Gold Membership - if you use a referral code your friend gave at the time of checkout.

• ‘Zomato Pro’ - Zomato Pro is an exclusive membership programme having privileges and discounts at 20,000 plus partner restaurants

• ‘Zomato Pro Plus’ - It is an ‘invite-only’ upgrade of Zomato Pro (all benefits of Pro applicable).  No delivery charges and no surge fees. However, the invite was up to Zomato’s discretion.

✅

Zomato has only one reason when restructuring or removing referrals/membership: “To create a better referral/membership programme.” However, it hasn’t been backed by numbers.

Current referral system breakdown ⚒️

 

The flow of the current referral program is shown below:

The messaging that goes along with referral

 

Now that we have seen the flow, let’s see the good ☑️ and the bad ❌ about it

☑️

1. Clear discovery on the tracking page → Link at eye level to grab attention (eye level means - between map tracking and order details option 2. Clear CTA → Refer Now 3. On points with the channel of communication - WhatsApp → Easy and quick; provides a one-to-many sharing option 4. Neat design and short messages → reduces cognitive load 5. The message copy is short with a welcome image → offer ending day mentioned clearly

❌

1. The ‘How it works’ carousel breaks the flow of the referral program → makes the user scroll multiple times rather than prompting to click ‘Refer Now’ 2. No referral tracking mechanism 3. Refer and Earn just comes after ordering food → Most negative point because it is not discoverable easily to non-active users/casual users (who don’t order so often) 4. No personalization for the receiver in the message copy

 

Conclusion

🚫

Zomato has only rolled out this referral system for some users. And this selectivity leads to less traction through this channel. - The selectivity is the primary reason for this referral program not working so well - The referral hook only comes after you order something - which makes it less discoverable for someone who is a casual user and not part of the circle of users chosen by Zomato

Onboarding

• Onboarding is seamless and also loved by users (based on user calls made)

• Stands apart by being the only food delivery app that supports multiple languages

• Room for improvement exists across the discoverability of language switch during signup

• Implementation of a dedicated preferred language options screen before signup to ease the flow

• Only 0.02% of people in India consider English as their first language

• Around 6.8% of people would call it their second language

• 90% of internet users in India prefer to consume content in their local language

• The first few reviews are negative which should be addressed.

• A rating of 4.0 (vs 4.4 from Swiggy) is low and should be addressed to improve. We will launch a review campaign within app notifications to get this improved.

• Zomato should run ads to have 1st level of ranking in the listing

• A carousel creative on top instead of the food image screen can show the major use cases of the app

• An addition of Instagram as a log-in option

• An option for the user to select a language before starting up the sign-up process.
Why is this necessary?
• Increase in user acquisition across Tier 2-3
• Increase in user acquisition b/w age of 30-50
• 53% of users from non-metro cities prefer to use apps in their own language rather than English

• Food Preferences can be asked randomly on screens to enable a robust customer profile along with order history data.

• Having a language selection option on our first screen

• Better visibility of language selection during the signup process

Engagement

What is the core value prop of Zomato? 🦐

How does this happen?

Best Engagement Frameworks 🎩

1. Reach: How far and wide a feature will be used across all user segments.
1. How many people will this impact? (High = 100, Medium = 80, Low = 50)

2. Impact: Since our end goal is revenue driven, for us impact would entail how much revenue can this potentially rake in.
1. Massive = 3x, High = 2x, Medium = 1x, Low = 0.5x, Minimal = 0.25x.

3. Confidence: How confident are we regarding the reach, impact & effort associated with our hooks?
1. High = 100%, Medium = 80%, Low = 50%

4. Effort: Number of person-weeks required to develop the product.
1. How many “person months” will this take?

What is the RICE score across the ideated E&R product hooks?

1. Awareness ₹

2. Drive connections - food is better with friends sort of campaigns. Z makes it easy.

Retention

Which ICP gives the best retention?

• The core JTBD for both ICPs is the same - “order good quality food very quickly and for reasonable prices”.

• Aspirers’ drivers have better retention because of the number of use cases they have for food delivery.

• Aspirers have more number of and more frequent use cases because of their behavior, relationship with food, and their affinity towards the primary solution

Which acquisition channel drives the best retention?

Which sub-product drives the best retention?

Understanding Churn

Understanding at-risk users

Resurrection Campaigns

Monetization

Litmus Test for Zomato

🤚 Retention

What Does Zomato’s Retention look like?

💰

Zomato’s overall retention flattens after M5 at around 25%. The current MoM resurrection rate is 2%.

Zomato’s Monetization Model

• Zomato can monetize customers in the middle layers of the RFM matrix through Zomato X. Champions have already been monetized completely. Offering Zomato X to them may have a negative impact on its profitability

• Zomato can also target revenue from restaurants through advertisements but not through commissions.

• RFM Segmentation of Zomato Customers

• Zomato is a transactional platform so every order when placed is monetized.

What is the perceived value of Zomato features for its customers?

• Willing to pay - Rs 200 per food delivery

• Save Time - 1.5 hours minimum on cooking

• Save Money - Won’t have to hire a cook.

• Willing to pay - Rs 900 per year for subscription

• Save Time - Waiting for a table

• Save Money - 10% on every dine out

Cost Levers for Zomato

• Marketing and Advertising = ₹1432 crores

• Delivery costs = ₹3915 crores

• Employee Benefits = ₹1659 crores

• Technology and Maintenance cost = Undisclosed

Main Metrics of Zomato Business Model

Revenue

• What It Is: This is the total income Zomato makes from all its business activities.

• Where It Comes From:
• Food Delivery: Money earned from delivering meals.
• Hyperpure (B2B Supplies): Income from selling supplies to restaurants.
• Quick Commerce: Revenue from fast delivery services for non-food items.
• Going-Out: Earnings from services related to dining out, like table reservations or events.

Gross Order Value (GOV)

• What It Is: This is the total value of all orders placed on Zomato before any discounts or promotions.

• Includes:
• Order Price: The full price of the food or items ordered.
• Delivery Charges: The fees customers pay for delivery.
• Platform Fee: Additional charges customers pay for using the platform.
• Packaging Charges: Costs for packaging the order.
• Taxes: Any taxes applied to the order.

Average Order Value (AOV)

• What It Is: This is the average amount of money spent per order.

• How It’s Calculated: Divide the total Gross Order Value (GOV) by the number of orders. It gives an idea of how much each customer spends on average.

Monthly Transacting Customers

• What It Is: This is the number of different people who have placed at least one order on Zomato in a month.

• How It’s Tracked: Customers are counted based on their phone numbers, so if you order once in a month, you're included in this count.

Monthly Active Delivery Partners

• What It Is: This is the number of delivery workers who have successfully delivered at least one order in a month.

• How It’s Tracked: Each delivery partner is identified using their national identity card, ensuring they are unique individuals.

Market Opportunity

1/ Diversification of Services

• Subscription-Based Meal Plans: Offer subscription models for regular meals, targeting busy professionals or health-conscious individuals, providing convenience and cost savings through planned menus.

• Integrated Food and Lifestyle Experiences: Expand services to include experiences like cooking classes, chef collaborations, or virtual dining events, adding a new dimension to the food experience.

2/ Expansion into Adjacent Markets

• Health and Wellness Products: Introduce a marketplace for health and wellness products, including nutritional supplements, organic foods, and fitness-related items.

3/ Partnerships and Acquisitions

• Global Partnerships: Form strategic alliances with international food and beverage brands to introduce exclusive offerings and cross-promotions.

4/ Education and Content

• Culinary Content Creation: Invest in creating or partnering with culinary content platforms, offering cooking shows, tutorials, and food education, positioning Zomato as a food authority.

• Nutrition and Dietary Guidance: Provide resources and tools for customers to make informed choices about nutrition and dietary needs, potentially partnering with nutritionists or dietitians.

Challenges

1. Lukewarm Response from Tier 2 Cities

2. Shift in Fin-Tech Strategy

3. High Commissions