Technology brings a tremendous lifestyle change. Even each action is being made easy by tech.
Now, in this world, everything is just a few clicks away. Besides internet adoption rate is also skyrocketing.
Everything is getting way easier. As of now, one can order food from the comfort of his home. Even he doesn’t even step out of his home.
Online food delivery startups are growing at a quick pace. Even users are also leaning towards the services of the app. Now it has become a trend to order food online.
There was enormous growth of online food delivery services. It signifies the kind of demand it had made. Even the food services market size reached up to $4 billion in 2020.
In India, there are only two major startups in the food delivery industry. The first company is Zomato works worldwide and another one is Swiggy a Bangalore-based startup.
The food delivery app, Zomato made a lot of efforts to reach such high heights.
Here in this blog, we are going to unveil the Zomato success story.
Now we are going to deep dive into the Zomato startup story.
Zomato is an online food delivery startup in India and it also aggregates hotels for food orders. The online food delivery system had brought new lifestyle habits to people. Zomato is one of the leading food delivery startups in India.
Besides, it has more than 2 lakhs of hotel chains for orders across 500 cities in India. Zomato had done tremendous work in covering main metropolitan cities. Its headquarters are in Gurgaon and Haryana.
Zomato, a food delivery startup, is serving more than 24 countries in the world. Almost, covering 10,000 cities across the world.
Pankaj Chhadah and Deepinder Goyal are founders of Zomato. Both came from the IITs and made a huge impact on the food industry. The company was founded in 2008 as Foodiebay. Later renamed Zomato.
Now any new hotel should have to partner with any food delivery partner to increase the sales. So, the majority relies on the food giant Zomato.
Online food delivery startup, Zomato turns unicorn in 2015. Its revenue trajectory is also kept rising year on year.
Now the Zomato net worth is about $8 billion. Moreover, Zomato IPO was also successful in raising nearly around 9000 crores.
Despite its fancy losses previously, everyone is keen on investing in the firm. Because the company will grow in future.
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Zomato Success story of its Founders
Any small problem will be existing in the world. Solving those problems will help you to build a multi-billion-dollar company.
Many startups initially take off with one specific problem to solve. Then after having an in-depth understanding of the industry, startups will try to extend their services in the same industry.
Startups are there to solve the existing problem. Whether it is small or big. Every company cannot find a gold mine at the initial stages. But a constant understanding of the people will surely bring the real gold mine.
This is similar to the Zomato success story. Small ideas turn into huge business models this is the core principal Zomato company.
Back in the late 2000s, the scenario in restaurants was messy. People were desperately waiting for the food they ordered. On the other hand, it was a hectic task for takeaways (parcels).
Going to the restaurants was a really good and comfortable experience for many foodies. This was the actual problem existing in the restaurant industry.
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Foundation of Zomato food delivery startup
Deepinder Goyal and Pankaj Chhadah were working in the same company Bain &Co. The duo was annoyed while observing people eagerly waiting for the menu cards to order the food.
This was the reality in every restaurant. No one is even bothering to solve the problem. But Deppinder Goyal and Pankaj came with the brilliant idea to start the website solely dedicated to the menu cards.
So, there will be no more wait for ordering the foods in the restaurants. Eventually, they founded a startup called Foodiebay in 2008.
Foodiebay serves menu cards of different restaurants with few clicks on their website. In a simple way, it provides menu cards online.
Then the startup has not looked back. Foodiebay user’s base kept on increasing at a quick pace. People were giving good feedback to the startup for its valuable service.
Further, Deepinder Goyal and Deepak came to the importance of the takeaways (parcels). The majority of the people come to the restaurant for the parcels. But many turn their back for the horrible customer experience.
To take small parcels it takes a minimum of 10 to 15 minutes it hurt the customers so much. Sometimes, an order made by customers would have been skipped or forgotten.
Both founders, Deepinder and Pankaj Chhadah came with the new plan of online food delivery.
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zomato success story of initial journey
From this concept, users can easily order food from the home via an app. Then the food will be delivered to the doorstep of the users.
Eventually, the duo came to the world of online food delivery systems. Initially, people were reluctant to order food online. Because people were new to the concept.
Then it was a very tedious job for acknowledging the people. Even it became too hard to explain the concept to the restaurant’s owners too.
Gradually, users came to know the concept of online food delivery. Besides, food delivery startup, Foodiebay was also giving huge discounts ordering food online.
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Subsequently, Foodiebay was renamed Zomato in2010. As there was a conflict between the name from the eBay company. To avoid complications founders decided to change the name of the startups to Zomato.
Deepinder Goyal and Pankaj Chhadah were the two main pillars for the Zomato success story. Now, the company has grown it newer heights, and even it came with a successful IPO in 2021 July.
Zomato had delivered nearly 214 million orders in the first quarter of 2020. Even Outbreak of Corona made its revenue growth in an exponential trajectory.
Deepak Chaddah Resignemt
One of the co-founders of Zomato, Deepak Chhadah has ready to leave Zomato. His last working day will be the 31st of March 2018.
Deepak Chhadah wants to discover new verticals of life and also wants to find new ventures in the future.
Further, Deepak Chhadah founded MINDHOUSE. This startup focuses on people’s health and provides yoga classes.
Zomato Business Model
Online food delivery startups have to invest huge capital at the initial stages. But the food delivery business will be profitable gradually. You can’t expect quick returns. Even Zomato started in 2010 till now the firm did not become profitable.
But there are many ways, that Zomato earns.
Firstly, Zomato earns through online deliveries. When the users order food from restaurants far away from their location. Then the company will charge more according to the distance between the user and the restaurant.
Even Zomato levies an extra amount based on the timings as well. Users have to pay surge prices if the order is placed while rainy days.
Secondly, it charges commission from the restaurant’s partners. For every order, Zomato charges a certain percentage from their aggregator. So, it is one of the significant ways that Zomato earns.
Thirdly, Zomato will charge for listing restaurants on the top of the search results in their app. When users open the Zomato app, they can observe many restaurants will be top. This is something like a paid promotion for the restaurants.
Thus, restaurants owner has to pay a certain amount to Zomato for promoting their restaurants. There are millions of restaurants in the Zomato app. So, one easily analyzes the revenue generation from this criteria.
The real reason for Zomato success story lies in their business model.
Zomato Discount Strategies
Every user orders food online via Zomato only for its huge discounts. Users are amazed by the kind of offers that Zomato provides. There are so many strategies for Zomato discounts.
Zomato can raise the price of the food in specific restaurants. But the restaurants are liable to take only the original price fixed in their restaurants. Sometimes, in the Zomato app, certain food prices will rise to 2 to 3x. But in restaurants, there will be a minimum base price.
Even, restaurants will take less amount on the takeaways. Because it saves a lot of expenses like table and utensils cleaning, employees and management costs.
So, if one plate of Biryani price is INR 200 then Zomato gets it around 170 to 180 range. But still, Zomato charges INR 200 or more from the customers who are placing orders online via Zomato.
In this way, Zomato provides huge discounts to its customers. These are some of the strategies of Zomato online orders. These are the main reasons for the Zomato Success story.
IPO of Zomato Success story
Online food delivery startup, Zomato was successful while listing in Public in July 2021. Zomato has successfully raised 9375 crores from its IPO.
Even the IPO was oversubscribed 38 times. Now the share price of Zomato is INR 76.
Zomato ipo 2022
Zomato India’s largest online delivery app is in big trouble now. The company has made a bumper I feel IP0 last year but now all the share price is going down. Zomato IPO has been a successful one they have got more amount from the public than they expected.
But in 2022 Zomato’s IPO and the share price have been falling sharply. According to the report, exactly 88000 crores have been crashed in the stock market. So this will be a huge shock for the Zomato invested in stocks.
Presently Zomato shares trading about 20% lower and the share price came down by 76 rupees.
So this will be a big head headache for Zomato investors. Even though Zomato is a loss-making company still investors are investing in the future prospective. Zomato founder the Deepinder Goyal as having told that Zomato will be profitable by 2024.
The main reason for the Zomato cash burn
Firstly Zomato has been diversifying two different particles. As you know now in India there is competition in the online grocery delivery system. Now Zomato is capitalizing and now trying in to keep footprints in the online grocery delivery. So zomato is trying to expand its presence in the online grocery delivery system by the acquisition of Blinkit.
Recently Zomato I have made a lot of investment in the startup called Blink to give a tough competition to the online grocery delivery startups such as dunzo, Swiggy’s Insta Mart, BigBasket, and Jio Mart.
So this is one of the reasons Where Zomato has made lots of investments and made a huge cash burn.
The second reason is competition in the food delivery system. As you know in India food delivery startups in India are growing tremendously. Zomato’s rival swiggy is giving a tough competition in the space. So the chances of getting profitable are very less for Zomato right now. Therefore Zomato spending a lot on discounts to crab customer retention and acquisition.
Online restaurants aggregator, Zomato has grown in both organic and inorganic ways. So, here are some of the acquisitions of Zomato
- Lunchtime for the US $3.25 million
- Gastronauci Pland based restuarant
- Urbanspoon for the $60 million
- Sparse Labs is a Logistic company
- Uber eats
Even Zomato has taken 9.3% stakes in Gorfers, India’s biggest grocery delivery startup. Zomato is trying to enter into the online grocery industry. Because there is a huge demand for online grocery delivery during COVID and post-Covid.
Even Zomato’s rival Swiggy entered into the online grocery space with Instamart
Zomato Startup and Blinkit
Zomato acquired Binkit for 4,447 crores in 2022. Now Zomato is all set to give competition in the grocery delivery business. India’s startup ecosystem is very competitive, especially in the grocery e-sector. As all you know, online grocery delivery is in great demand even after the post-pandemic.
A lot of companies compete in the online grocery delivery space companies as Swiggy Instamart, Dunzo, and Zepto. These are the companies spending a lot in the quick commerce space. Now the new latest trend is all about 10 minutes grocery delivery model.
Zomato startup acquired Blinkit at the right time. Because to stay in the race of online grocery delivery space. Now companies like Swiggy Instamart and Zeptp have to build a strong foundation.
Now swiggy Instamart is running an online grocery business pretty well. Almost more than 15% of swiggy revenue comes from the grocery business. Gradually swiggy instrument business is becoming a more stable subsidiary business.
On the other hand, the Zetpo startup was built by standFords dropouts. Is capitalizing on their funding and trying to remain in the competition by spending on their reserve.
Zomato Downfall after IPO
Zomato success story is not relevant anymore. The food aggregator Giant in India, zomato is now struggling. The share price of Zomato has dipped more than 70%.
After the acquisition of Blinkit for over 4000 crores. Now the condition of Zomato has been still going down more. All the investors are pointing out Zomato’s mistake.
Blinkit (Gorfers) has been rebranded and is under process for many years. And also there was no progress towards profitability. At this time Zomato acquired Blinkit. But it was not the right time for the acquisition.
For this reason, Zomato shares price has been taken down drastically. At present, on August 27, 2022 Zomato’s share price has gone down to 61.85 rupees.
Now Zomato’s top investors are also losing and keep on leaving the company. One of the first investors to exit the company was Moore Strategic Ventures. So, the Moore Venture had an exit from Zomato by selling 42.5 Mn shares in the open market.
Then one of the leading investors in Zomato, Uber also lost hope and
took the exit. So, Uber sold Zomato’s 612 Mn shares for $394 million. After the sale, Uber got a 100% return on investment.
In this way, zomato investors are leaving the company. So it is drastically impacting the share price of Zomato. The Zomato success story is leading to horrific conditions.
Zomato acquired Blinkit for 4,447 crores to remain in the competition. But it made a negative impact on the share price of Zomato.On the day of Zomato’s acquisition of Blinkit, Zomato’s share price lost over 21%. Ultimately this 21 % share worth is over $1 billion.
So, Zomato lost drastically in the stock market. Everyone is losing hope in the Zomato. Because there is a shortage of funding from foreign investment. All other startups are laying off their employees to save their funding and become profitable.
Now Zomato Acquired Blinkit for over 4000 crores in 2022. Ultimately zomato tries to come back into the stock market pretty soon. Globally there is an economic slowdown due to the Russia-Ukraine war and the effect of the post-pandemic situation.
Even inflation in India is also Rising. To make the matter worse, now in the Indian stock market, where Run is successfully running. Subsequently, e Sensex and Nifty are drastically laid down.
Zomato Success Story is an inspiration for all entrepreneurs. There are a lot of ups and downs in the company. It is the ultimate situation for every startup. This is the time to be stable and fight all the odds and come back with a successful run.
Zomato 2022 Intracity business
Zomato is trying to keep on expanding its services to make the company profitable. After the acquisition of Blinkit for 4400 crores, its share price was down once again. Even a lot of investors were criticized, and they did not inform about the acquisition.
So after all, it made give tough competition for swiggy intimate and dunzo. Because online grocery delivery is in demand services in India. Even the early state startup Zepto made a tremendous improvement in the grocery delivery space.
Now Zomato has taken the Indian ecosystem to another level. It is now experimenting the food delivery across States. So a lot of people are curious to know about the intracity business model of Zomato.
However, Zomato is one of the biggest online food delivery startups in India. So it has a lot of connections across the country. Even it is connected from one of the smallest restaurants to the most expensive restaurant. Even millions of restaurants were tied up to Zomato.
So this gave them a superpower to launch intracity e-services. So from now onwards, a guy from Bengaluru can book a delicious Hyderabadi biryani from Hyderabad.
But here is a catch, zomato has to fight once again with the delivery time. In the Intracity business model, delivery timings would be around a day or two. So one cannot expect that intracity delivery will happen within hours.
Still Zomato Intercity business is in a nascent state. So it takes time to improve the business and delivery timings.
Zomato Intercity’s business model is currently present in 10 major cities with 120 restaurants partner.
To tackle the quality of food, zomato is preserving the food at either 50 to 60 degrees Celsius or below 15-degree celsius. The temperature range depends upon the type of food.
It is a new experiment from Zomato. So let us watch and wait whether intracity food delivery will become a new business.
In this way, a small menu card website reached become India’s multibillion-dollar startup. This is from our side Zomato Success Story.