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Thursday, February 22, 2024
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Zomato Business Model: Customer Segment & Marketing Strategy

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Zomato is an Indian multinational food delivery company founded by Deepinder Goyal and Pankaj Chaddah in 2008. Zomato connects all the restaurants and partners all across the country through its technology platform and delivers food to its customers with the help of its partner restaurants. Zomato business model provides information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities. It helps restaurants to expand its customer base and deliver its food to the last mile connectivity. Along with the food delivery business, Zomato also supplies high-quality ingredients and kitchen products to restaurant partners through its one stop procurement solution, ‘Hyperpure’. Presently the Zomato is operating in 10,000 cities in 25 countries including the USA, India, Australia, Singapore, Brazil, and New Zealand.

Zomato Business Model

The main elements of the business model of Zomato are as follows:

(a) Zomato Value Proposition

Zomato business model is based on providing the customers value. Zomato focuses on the QAAA model, which promises and offers customers and partners quality, accessibility, accessibility, and portfolio. The values provided by the Zomato to its customers can be understood in the following way:

(b) Easy Accessibility for Customers

The greatest value of Zomato provides to its customers is easy accessibility of good food to customers. Initially Zomato started with metro cities and now it has expanded its operations in tier I and tier II cities also. The customers can order food of their choice by simply using its technology platform.

(c) Improving Food Quality

Zomato helps its partner restaurants to maintain high quality standards through Hyperpure (discussed earlier) and Food Hygiene rating.

(d) Affordable Food

Zomato aims that the food should be affordable for its customers without compromising on profits for partner restaurants.

(e) Providing Best Information

Along with delivering food to the customers, Zomato provides the best information to its customers so that they may take an informed choice.

Key Customers of Zomato

Broadly, there are three customer segments in Zomato’s business model.

(i) Users: The users can order food of their choice from their favorite restaurant at the comfort of their home, using Zomato app. Some users, who what to go out for food can use the Zomato’s technology platform for information about the nearby restaurants, menu, distance, etc.

(ii) Restaurants: The local restaurants can use Zomato to enhance the visibility, advertisement, etc. Zomato also helps the restaurants improving their quality by tracking their performance using its analytical tools.

(iii) Reviewers: Zomato has one more segment that is reviewers. These are also called content creators of Zomato, who provide the customers information about the restaurant and food by giving the rating and reviews on various parameters.

Zomato Revenue Model

Now let us understand, how Zomato earns money. The revenue model of Zomato has following elements:

(a) Delivery Charges

Whenever the users order some food through Zomato, it charges some delivery fee from the customers on each order. It also charges commission form the restaurants on each order.

(b) Premium Service

Zomato offers premium service to the customers called Zomato gold and charges a subscription fee in exchange. The premium service includes exclusive discounts and offers at participating restaurants.

(c) Zomato Advertising

This is one of the revenue stream of Zomato, in which Zomato allows the restaurants to advertise on its platform and charges fee for that.

(d) Zomato Kitchens

Zomato provides kitchen infrastructure service to selected restaurant operators. The companies can invest ₹35 lakhs or more to finance restaurants at the correct place. According to the Zomato, the investors investing in this model are already getting a monthly return ranging from ₹2 Lakh to ₹4 Lakh with 180+ kitchens already in operation.

(e) Live Events

Zoomland is an event organized by Zomato where one can find fun, artistic works, and most importantly food varieties. Zomato charges users’ certain fees to get entry access to this showpiece event. The information about this event can be find on the Zomato App and even on PayTm Insider. It takes place in 7 cities which are Pune, Mumbai, Ahmedabad, New Delhi, Bengaluru, Hyderabad, and Kolkata.

Zomato Valuation and Funding

As of January 2023, the marketing capitalization of Zomato is $5.82 billion. Zomato has been successful in raising funds of $2.6 billion in 22 rounds. Zomato’s prominent shareholders are as follows:

Kora – $115 million

Fidelity – $55 million

Tiger Global – $50 million

Bow Wave – $20 million

Dragoneer Investment – $10 million

An IPO worth $1.1B was issued by Zomato in FY22, which generated $525M in revenue.

Zomato has invested in many companies with their most recent being in the food tech industry. Recently Zomato has invested in UrbanPiper to keep pace with the latest technology and trends in this sector.

Zomato has started acquiring companies to grow its business. Zomato has acquired 15 companies, the most recent being blinkit, a restaurant table-booking service, on March 16, 2022, for $725 million. Some of its acquisitions are as follows:

Blinkit

FITSO

Uber Eats – India

TongueStun

Runnr

Sparse Labs

NexTable, Inc.

MapleGraph Solutions Private Limited

Mekanist

Few investors have sold their stakes in the company, the details of which is as follows:

Tiger Global- 5.11% to 2.77%

Sequoia Capital India– 6.41% to 4.4%

UberMooreDelivery HeroD91

The above acquisitions and investments helped Zomato to strengthen its position in the global market as the leading food delivery company.

Zomato Marketing Strategy

Zomato is known for its unique and robust marketing strategy. Innovative content mixed with technology makes the marketing strategy of Zomato creates a competitive advantage for the company. The main elements of its marketing strategy are as follows:

(i) Content Marketing

Zomato creates unique and engaging content and distributes it well. The content of Zomato is so attractive that it catches attention of viewers quickly and helps Zomato conveying the message effectively.

(ii) Marketing Through Social Media

Zomato has millions of followers on Facebook, YouTube, Twitter, and Instagram, which drives traffic. Most of the audience of Zomato falls in the range of 18-35, hence their social media strategies are engaging, funny, and witty.

(iii) Promotion Through Twitter

Zomato promotes it through twitter also. Zomato tweets are funny and mainly focused on brand offerings.

(iv) SEO Strategy

Zomato ensures that the content it creates is attractive, engaging and at the same time optimized for search engines. Over 61% of users visited the Zomato website via Google search. Zomato gets backlinks from approx. 12 lakh unique and high-authority domains.

(v) Visual Advertising

Visual advertising is a prominent part of Zomato’s marketing strategy. Zomato uses billboards, and video adverts to promote itself. Its visual content is simple, bright colored and appealing which attracts viewers easily.

(vi) Email Marketing

Zomato makes promotion by sending e mails to users. Their email marketing strategy is interactive and engaging which helps attracting target audience in an effective manner.

Conclusion

Zomato is the most successful food delivery company and restaurant aggregator. They are operating with their more than 900,000 restaurants in over 24 countries and serving their customers. Zomato understands customer needs and connects well with them. Its innovative idea, unmatched technological platform and unique marketing strategy provides it a competitive edge which is unbeatable. With increased demand for food delivery and growing restaurant industry, the profitability of Zomato is likely to go up in future. Along with the food delivery, Hyperpure is also an area where the company can scale up its business.

Also read: Walmart’s Business Strategy and Competitive Advantages, Uber’s Mission, Vision and Business Strategy

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Rajesh Pant
Rajesh Panthttps://managemententhusiast.com
My name is Rajesh Pant. I am M. Tech. (Civil Engineering) and M. B. A. (Infrastructure Management). I have gained knowledge of contract management, procurement & project management while I handled various infrastructure projects as Executive Engineer/ Procurement & Contract Management Expert in Govt. Sector. I also have exposure of handling projects financed by multi-lateral organizations like the World Bank Projects. During my MBA studies I developed interest in management concepts.
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