Zomato Case Study and Marketing Strategies | Success Story

Zomato’s case study, success story, marketing strategies and the overall journey will serve as an inspiring business model for Indian entrepreneurs for many years to come. Just like a typical startup, Zomato too has had its fair share of ups and downs. Because of this reason, many aspiring entrepreneurs can learn a lot by delving deep into what Zomato has done to reach at the pinnacle of success in the food delivery industry.

In this post, we will take a good look at the entire journey of Zomato, its marketing strategies and the way it shaped the online food-ordering-and-delivery system in India.

Quick trivia

Did you know that Zomato has some sort of presence in as many as 24 countries and 10,000 cities? Zomato doesn’t provide food delivery in all these countries, but lists a plethora of information in terms of menu and user reviews.

The founders of Zomato

Two IIT graduates named Deepinder Goyal and Pankaj Chaddah co-founded Zomato in July 2008. Before launching Zomato, they were employed with a management consulting firm named Bain & Co. (Delhi office).

The idea behind Zomato – A brief history

The idea of an online food menu struck the duo when they saw people standing in a queue at lunchtime in office and waiting for their chance to order. So they took pictures of the food court menu and uploaded them on their company’s private network. Everybody at the company started using the website, and Deepinder and Pankaj noted the huge traffic the network got in a few days’ time.

This gave them the idea of starting a portal called “Foodiebay”, where users could browse through the menu of eating joints and restaurants and see their reviews and ratings right from their computer. Foodiebay began listing restaurants from Delhi-NCR on their website and quickly expanded to other cities like Mumbai and Kolkata. The first professional restaurant that found its spot on Foodiebay was from Hauz Khas in Delhi.

Soon the website was covering thousands of restaurants from metropolitan cities and the founders thought that they would rebrand it with an appealing name that would attract customers in abroad too, if they expand to such a level. As a result,

Foodiebay was rebranded as Zomato in November 2010.

By 2016, Zomato had a full-fledged app up and running, which was providing food deliveries from registered restaurants, through their thousands of valets.

Zomato Business Model

Zomato runs on a commission business model. It generates most of its revenue from the commission that it charges the restaurants for every order placed through their app. Furthermore, it also makes decent revenue from advertisements – the “promoted” restaurants that you see at the top of your search results.

Zomato Funding

Zomato has undergone multiple rounds of funding since 2010. Here are the funding rounds in chronological order:

• Zomato raised $1 billion through Sanjeev Bikhchandani led Info Edge India in December 2010
• In 2013, Zomato again received $13 million from Info Edge India, making the firm a 50% stakeholder in Zomato
• Post the 2013 funding, a number of investors such as VY capital, Sequoia Capital and Temasek provided an undisclosed amount of funds to Zomato
• It is believed that by the end of 2018, Zomato had received funding of more than $300 million. Thanks to these funds, Zomato was able to expand its business into more cities
• Zomato raised $660 Million in the funding of Series J round led by Tiger Global Management and Kora. With this, Zomato’s funding rose to $3.9 billion.

Zomato IPO

Zomato filed draft documents with SEBI in April 2021, with the objective of raising INR 8,250 crore. The Zomato IPO opened up on July 14, 2021 and closed on July 16, 2021.

The price band for the issue was fixed at INR 72-76 per share with a face value of INR 1 each. Investors could bid for a minimum of 195 equity shares.

Zomato’s IPO was among the first from the list of unicorn start-ups in India and the first of an online food ordering business.

Zomato Hyperpure

Zomato Hyperpure is the company’s B2B vertical through which it supplies highest-quality ingredients and kitchen products to restaurants. You can buy the following items with Zomato Hyperpure:

• Fruits and vegetables
• Groceries
• Dairy products
• Gourmet and packaged foods
• Beverages
• Packaging and Kitchen Consumables
• Bakery
• Meats and seafood

Zomato Acquisitions

Zomato has acquired many companies in its journey so far. Given below are all the acquisitions that Zomato has made, earning itself the tag of ‘Acquisition King’:

Acquired menu-mania in July 2014

The company acquired Czech Republic’s restaurant guide- Lunchtime and Slovakia’s restaurant guide- Obedovat for a combined sum of $3.30 million

It acquired Italian restaurant search service, Cibando

Then, the company bought Poland’s restaurant search service, Gastronauci

The following year, in 2015, Zomato acquired Urbanspoon for $60 million

The same year Zomato made a few more notable acquisitions in the form of US-based NexTable and Delhi-based startup MapleGraph

The company then acquired a logistics-technology startup named Sparse Labs

Acquired Runnr, a food-delivery startup, in 2017.

The year 2018 was good in terms of acquisitions as the company acquired two more businesses, namely Bangalore-based TongueStun Food and Lucknow-based TechEagle Innovations

Zomato acquired Uber Eats in January 2020 for a whopping $206 million – Perhaps one of the most notable acquisitions of the lot

Zomaland

Zomato has come up with its own food and entertainment carnival named Zomaland. Its debut edition in 2018 was held in 3 metropolitan cities, viz. Mumbai, Bengaluru and Delhi.

This flagship event brings together a number of cuisines and entertainment methods together – be it music, dance, comedy acts, carnival games, etc. Zomato has partnered with many notable companies for the organization of its event in as many as 10 cities.

Zomato Marketing Strategies

Zomato markets itself very well, in a way that appeals to people. Here are a few marketing strategies followed by Zomato

Social Media
Zomato doesn’t use social media in the conventional corporate way. It believes in making humorous, playful and sometimes sarcastic posts that appeal to the youth. Because of this reason, most of the posts by Zomato on Twitter often go viral with many other companies and netizens joining the banter. For instance, this infectious smile by a Zomato delivery guy garnered a huge meme fest on social media.

Then, they often come up with some witty lines as well, such as:

Then they also capitalize on many sport events such as the IPL by launching their own cashback leagues such as Zomato Premier League.

2) Pay-per-click (PPC) ads

Zomato invests heavily in its PPC ads on search engines and social media portals such as Facebook, Twitter and Instagram. If you have ever seen their ads on any social media network, you’d know how mouth-watering their pictures and banners look. Zomato, as a result, acquires many of its new customers from social media.

3) YouTube Marketing

Zomato knows the importance of videos. That’s why you’d often see many advertisements of Zomato while you are watching videos on YouTube. Despite aggressive promotion on YouTube, the company isn’t too active on its YouTube Channel as you would expect.

Zomato Competitors

In India, Zomato faces direct competition from rival Swiggy. Until 2020, it also had a strong competitor in the form of Uber Eats, which it acquired in a $206 million deal. Zomato enjoys a monopoly in the food delivery business in many smaller cities like Chandigarh, Mohali and Panchkula.

Introduced Contactless Delivery during COVID-19 pandemic

The online food aggregator made many enhancements to its delivery protocol during the unprecedented pandemic. Temperatures of all delivery valets were checked multiple times a day and they had to sanitize their hands before picking up any order.

The company stopped accepting Cash on Delivery (COD) and encouraged people to use any kind of digital payment method. At the time of the delivery, the executive dropped customers’ packages outside their doors and left quickly to avoid the risk of transmitting or contracting the virus. Wearing a mask and a pair of gloves was, of course, mandatory for all valets. If they failed to do so, customers could report them through the delivery rating from the app.

Top reasons behind Zomato’s continued success

There are many reasons behind the successful launch and growth of Zomato. Here we present to you the most notable ones:

1) First-mover advantage

India wasn’t familiar with the terms “online food ordering” until Zomato came along. Thus, Zomato has always had the first-mover advantage to capitalize on. And it did so quite effectively too.

2) Continuous flow of investment

Zomato has never been shot of funds. If you take a close look at the funding timeline mentioned above in this blog post, you will see that Zomato has been very successful in convincing investors about its long-term vision and growth objectives.

3) A strong network of restaurants and delivery valets

Zomato has managed to bring most of the restaurants and hotels on its app, with much ease, despite the hefty commission and promotion fee that it charges. A handful of eating joints that are not listed on the platform are missing out on some really good revenue opportunities.