At some point in our lives, we have all probably witnessed people waiting in queues to order a meal. Who would have thought that the idea of Foodie Bay would lead to Zomato, one of the biggest food aggregators in the world? Just imagine a person who is hungry but has no clue of what to order or from where. There comes the Zomato. They can go to the website, browse the restaurants, check reviews, and then place the order. The delivery will arrive at your doorstep. To know more about Zomato, let’s understand its business model in detail.
The Story Behind Zomato
Zomato was founded approximately 17 years ago. Back in 2008, the concept was originated by a trio of 3 passionate foodies who hate waiting in long lines. It was the need to have instant access to thousands of restaurant menus online on a single platform and the dedication to make it possible gave birth to Zomato. Today it has grown exponentially and has a team of more than 5000 people.
Zomato wasn’t the name of Zomato in the beginning. It launched as ‘Foodiebay’ in the market, which was an online directory of restaurants. CEO Deepender Goyal sensed that they needed to rename it as it resembled ‘eBay,’ and he planned to create a unique brand identity. Hence the naming ceremony happened, and since then it’s recognized as Zomato.
From a small venture, it has expanded into a large food aggregator that runs globally. As of now it operates in 24 countries and over 10000 cities. They are working day and night towards its vision of quality food for everyone. Apart from discovery and delivery, Zomato has invested in a number of other markets, including live events, loyalty programs, and restaurant reservations. Zomato not only bridges the gap between food and people, instead, it is a prime example of teaming up with restaurants to promote a sustainable ecosystem.
Business Model of Zomato
The popularity of Zomato stems from its strong business model. Basically, Zomato is a software application whose business model encompasses food delivery services, information collection, customer reviews, and the menus of countless affiliated restaurants. Zomato has become the pioneer for various online food-based applications in the food-tech industry. The following are the vital components of Zomato’s business model:
- Customer Segments: It is divided into 3 parts:
- Local restaurants: Zomato allows restaurants to advertise themselves in front of their target audience.
- Users: Zomato is committed to users who want to search for restaurants or specific meals nearby. In other words, you can say that Zomato is the panacea for those who are comfortable with home delivery.
- Reviewers: They thoroughly review food and locations and give relevant information to the viewers in text and graphic form.
- Zomato Provisions: As we discussed earlier, Zomato is the connection between customers and partner eateries. Zomato has developed a thoughtful pricing model for their delivery services. The integration of Zomato Gold & Piggybank has enhanced the quality of offerings provided by Zomato.
- Alliances of Zomato: Recent agreements with MNCs like Uber Taxi, Visa, PayPal have improved the business model of Zomato. The partners have helped Zomato in several aspects, for example, finding a place to set-up, hiring and other processes, work placements, R&D, managing operational, financial, political and legal matters, etc.
Key Activities of Zomato
The following are Zomato’s key activities:
- Managing to Advertise: Zomato keeps an archive of the user data, which it later on uses for advertisement. The company runs advertisements for different restaurants, thereby making a huge profit for itself.
- Enhancing Customer Experience: Zomato conducts dozens of activities to improve customer experience. It updates its features in accordance with new developments.
- Upholding the Brand Image: Zomato makes an effort to maintain its honor as the information source for the foodie community by making sure that genuine information is available to its users, assisting them in answering two crucial questions: where and what to eat.
- Zomato White label: Zomato uses a plug-and-play platform developed by a web and mobile app development company to assist restaurants in creating their own reliable apps.
Revenue Streams for Zomato
- Commission on Delivery Services: These commissions accounted for about 75% of the gross revenue of Zomato in the financial year of 2019. The amount was $155M, which was 4x what they made earlier.
- Zomato Gold: This scheme is based on the freemium business model. Its purpose is to provide premium services to the users who subscribed. This system supports the customer in getting free food and drink services, if they have bought gold memberships. This service alone raised a staggering $49M in FY19 and $30M in FY20.
- Ticket Sales: The ticket sales for numerous events organized in restaurants in collaboration with Zomato earn a huge revenue for Zomato in the name of commissions. Additionally, Zomato charges for the advisory services it offers its partners.
- Promotions: Zomato actively participates in the marketing of many restaurants. Through banner ads, partners increase their visibility and exposure, and Zomato charges them for this.
In Short
Zomato has transformed the entire food sector by bringing the concept of open access to restaurants into real life. We have addressed the Zomato business model thoroughly and reviewed its every aspect. So if you are also interested in developing an online marketplace same as Zomato, without any hesitation, reach out to Backup Infotech. We are a professional IT company that provides various services, from developing your website to ranking it on the top page of the search engine. Contact us right now.
FAQs:
- What is the business strategy of Zomato?
Ans: Zomato’s business strategy includes using Google Ads to target keywords like “food” and “restaurant names.” It also uses Google Display ads to reach users on third-party apps and websites to attract food delivery customers.
- What framework does Zomato use?
Ans: Zomato uses React Native to build its mobile app. This framework helps create a uniform experience across iOS and Android, reduce development time and ensure the app works smoothly on both platforms.
- Why is Zomato profitable but not Swiggy?
Ans: Because of its flexible and strong framework to support its operations across 750+ cities. Its wide presence leads to higher app downloads, which result in the increased monthly active user (MAU) base compared to Swiggy.
- What is the principle of Zomato?
Ans: The main work of Zomato is to find nearby restaurants and place orders based on ratings and reviews from other customers. It connects users with their favorite eateries, making dining choices easier and more convenient.
- Which algorithm is used in Zomato?
Ans: Zomato uses a machine learning algorithm that analyzes data from users and restaurants to suggest dining options. It considers user preferences, past behavior, and trends to provide personalized recommendations for a better food discovery experience.