Zomato Case Study: Professional Insights & Valuable Lessons
Morning Notification:
Afternoon Notification:
Late Night Notification:
You know who’s behind these mouth-watering notifications, tempting you one bite at a time.
That’s right—Zomato.
Today, we will dig deep into the delicious success story of Zomato—a brand that doesn’t just deliver food but has redefined the way we eat.
Let’s understand how a simple idea turned into a global food delivery giant, now operating in almost 24 countries and over 10,000 cities in India with over 50 million active monthly users.
Zomato currently delivers food in every state in India and making profits
How did it start?
Zomato’s journey started in 2008, not in a high tech office or a bustling startup hub, but this idea germinated in the mind of Deepinder Goyal, a young IIT Delhi graduate. who was then working in Bain & Company, juggling with one question every lunch hour like many of us: “what’s for lunch, today?”.
Deepinder and his colleague, Pankaj Chaddah, often had to wait in line at their company’s cafeteria. They noticed that every employee there was facing the same issue, and at that very moment, they had an idea: what if there was a way to view the cafeteria menu online?
And that is how Foodiebay was born.
Now you must be wondering how Zomato is related to all this?
It is because Zomato started as Foodiebay.
From Foodiebay to Zomato
What started as a simple solution to a common problem became popular in no time. By 2010, Foodiebay was rebranded as Zomato, a name that was new, catchy, appealing and easy to remember by customers.
The brand initially aimed to connect food lovers with their favorite restaurants, making dining choices easy and accessible.
The rebranding wasn’t just to be unique in the market but it had the broader mission: enabling users to discover new restaurants, read reviews, and eventually order food online.
Key Strategies and Growth:
Marketing and Branding
Zomato’s marketing strategy has been one of its strongest assets. Best known for its quirky and relatable social media content.
Their content often goes viral!
See how other brands are jumping to tweet in sync with zomato.
It has been noticed that they primarily focus on:
- Content Marketing:
Zomato’s content marketing strategy involved creating engaging and shareable content. Their blog, “Zomato Treats,” provided users with food guides, restaurant reviews, and foodie tips, establishing them as a thought leader in the food industry.
Zomatos’s Web Traffic Statistics
Source - Social Media Marketing:
Zomato’s social media presence is known for its witty and relatable funny posts. Zomato’s copies were a treat for their readers. They are taking the best advantage of platforms like Facebook, Twitter, and Instagram to engage with their audience through memes, food puns, and timely content related to trending events.Zomato uses Instagram, Facebook, and Twitter. As of June 2024, it has 977K Instagram followers, 1.9 million on Facebook, and 1.5 million on Twitter. Take “Zomato Premier League”, for example, the campaign, blended cricket match predictions with amazing food rewards and the love for cricket and food lead to massive engagement.
- Influencer Marketing:
Zomato collaborated with food bloggers, chefs, and social media influencers to reach a wider audience. These influencers shared their experiences with Zomato’s services, creating authentic and relatable content that encouraged their followers to try the platforms.Influencer Mithila Palkar campaigned with Zomato for their Zomato Gold Dining Carnival. - Email Marketing:
Zomato utilized email marketing to keep their users engaged. Personalized emails based on user preferences, order history, and local restaurant promotions helped in retaining customers and encouraging repeat orders. - Event Sponsorships and Partnerships:
At a stage when zomato became big, it sponsored food festivals and partnered with events like the Great Indian Food Festival by Zomato live, further enhancing its brand visibility and connecting with food enthusiasts.
Source - Advertising on Billboards:
Zomato used traditional advertising strategies, such as billboards, to reach their offline audience. Their catchy and amusing billboard advertisements helped to raise brand awareness and attract potential customers, thus reinforcing their market position.
Source
Profit Revenue of Zomato
Zomato reported Rs 175 crore PAT in Q4 FY24, wherein their revenue was reported to go up 8.3%.
Zomato’s earnings from operations increased by 8.3% to Rs 3,562 crore in Q4 FY24, compared to Rs 3,288 crore in Q3 FY24, according to the company’s consolidated financial reports from the National Stock Exchange.
Food and delivery income contributed for 48.8% of total revenue in Q4 FY24, increasing 2.1% to Rs 1,739 crore from Rs 1,704 crore in Q3 FY24. The total sales from Hyperpure Supplies (B2B) and the Quick Commerce vertical (Blinkit) increased by 10.7% and 19.4%, respectively, to Rs 951 crore and Rs 769 crore.
Funding and Financial Strategy
Zomato’s growth was backed by substantial funding from notable investors.
Here’s a detailed look at their funding journey:
Seed Funding and Initial Rounds (2010-2013)
2010 to 2013
Zomato raised approximately $ 16.7 million from Info Edge, the parent company of Naukri.com across four rounds. By February 2013, Info Edge held a 57.9% stake in Zomato.
Series C Funding Round (2013)
November 2013
Zomato raised $37 million from Sequoia Capital and Info Edge. This funding helped Zomato expand its operations and scale its platform.
Series D Funding Round (2014)
November 2014
Zomato completed another round of funding of $60 million at a post-money valuation of approximately $ 660 million. This round was led jointly by Info Edge and Vy Capital, with participation from Sequoia Capital.
Series E Funding Round (2015)
April 2015
Info Edge, Vy Capital, and sequoia Capital led another round of funding for $50 million. This round supported Zomato’s further expansion and technological development.
September 2015
This was followed by another $60 million funding led by Temasek, a Singapore government owned investment company, along with VyCapital.
Unicorn Status and Subsequent Funding (2018)
February 2018
Zomato became a unicorn startup after raising $200 million from Ant Financial at a valuation of $1.1 billion.
October 2018
Later that year, zomato raised an additional $210 million from Ant Financial at a valuation of around $2 billion.
Further Funding Rounds (2020-2021)
September 2020
Zomato raised $62 million from Temasek after a previously committed investment from Ant Financial did not come through.
October 2020
As part of a Series J round of funding, Zomato raised $52 million from Kora, a US-based investment firm.
February 2021
Zomato raised $250 million from five investors, including Tiger Global Management, at a valuation of $5.4billion.
Types on investors:
- Venture Capital Firms: Sequoia Capital, Vy Capital, Kora.
- Private Equity Firms: Info Edge.
- Strategic Investors: Ant Financial (a subsidiary of Alibaba Group). Temasek Holdings.
These investors provided not only capital but also strategic guidance to help Zomato scale its operations and expand globally.
Financial Impact
The funds raised enabled Zomato to:
- Expand into new markets, both in India and Internationally.
- Invest in technology to improve user experience and operational efficiency.
- Enhance marketing efforts to build brand recognition and custom loyalty.
- Develop new services and diversify offerings, such as cloud kitchens and grocery delivery.
Zomato’s strategic funding approach, combined with diverse investor support, has been crucial in transforming it from a startup into a global food delivery powerhouse.
Technological Innovation
From the beginning, Zomato has been taking advantage of the technology to enhance the user experience.
Here are some key technological advancements:
- Mobile App Development
The development of a user-friendly mobile app was crucial for Zomato. The app allowed users to discover restaurants, read reviews, and order food seamlessly. It also included features like real time order tracking and personalized recommendations based on user preferences and order history. - AI and Data Analytics
Zomato leveraged AI and data analytics to enhance the user experience. Their recommendation engine used machine learning algorithms to suggest restaurants and dishes based on user-behavior and preferences. This personalized experience helped in retaining customers and increasing order frequency. - Hyperlocal Delivery System
Zomato developed a robust hyperlocal delivery system to ensure timely food delivery, they used GPS tracking and route optimization algorithms to minimize delivery time and improve efficiency. - Cloud Kitchens
To expand their delivery network without the overhead of traditional restaurants, Zomato invested in cloud kitchens. These kitchens operate solely for delivery orders, allowing Zomato to offer a wider range of cuisines and reduce delivery times. - Global Expansion
Zomato’s vision wasn’t restricted to India, with each success and progress their vision extended far beyond the Indian market.
By acquiring local food delivery startups and integrating their operations, Zomato expanded their wings into 24 countries, including the USA, the UAE and Australia.
Their intensive and vigorous expansion strategy involved customizing their offerings to suit local tastes and preferences.
Acquisitions
Zomato acquired several local food delivery startups to enter new markets and gain local expertise.
Key actions include:
- MenuMania (New Zealand)
- Lunch time (Czech Republic)
- Obedovat (Slovakia)
- Gastronauci (Poland)
- Cibando (Italy)
- Urbanspoon (USA)
These acquisitions helped Zomato establish a presence in new regions and leverage the existing user base of the acquired companies.
Zomato Acquired Blinkit
Zomato expanded into online grocery delivery by acquiring Blinkit for Rs. 4447 Cr in 2022, further strengthening its market position. As it grows, Zomato remains a shining example of success in the competitive food tech industry. |
Zomato playing its role in giving it back to the society
Zomato’s Feed India initiative focuses on fighting hunger and reducing food waste.
Here’s how they do it:
NGO Partnerships: Zomato acquired Feeding India, a non for profit organization in July 2019. Zomato served free meals to underprivileged communities.
Food Distribution: Collects excess food from restaurants and events, delivering it to those in need.
Volunteer Engagement: Encourages employees and users to help with food collection and distribution.
COVID-19 Response: Provided meals to daily wage workers and migrant laborers during pandemic.
Sustainability: Reduces food waste by redistributing surplus food, promoting environmental sustainability.
Fund Collection: Using millions of users on zomato apps, it adds just Rs:3/- to their bill which can be selected voluntarily by its user. However, since it’s a tiny addition, and is selected as a default, most people add this amount to their bill.
Relief Campaigns
Zomato has been actively involved in various relief campaigns to support communities in dire need.
- Assam and Meghalaya Relief: Support families affected by Assam and Meghalaya floods
- India Needs Oxygen: Oxygen support for people affected by COVID-19 pandemic.
- Feed the daily wages: Food assistance for families affected by the COVID-19 lockdown, 7,49,033 ration kits were distributed.
Challenges and Resilience
Like any startup, Zomato faced its fair share of challenges:
Competition: Competing with local players like Swiggy in India and Uber Eats globally required constant innovation and customer retention strategies.
Logistics: Managing logistics for food delivery in diverse and geographically challenging markets required a robust supply chain and reliable delivery partners.
Regulatory Hurdles: Navigating the regulatory landscape in different countries, including licensing, and compliance, posed significant challenges.
Conclusion
Zomato’s rise from a simple idea to a global food delivery business proves the power of innovation, strategic planning, and a strong focus on customer satisfaction.
Their journey teaches startups the importance of adaptability, leveraging technology, and effective marketing.
As Zomato continues to grow and evolve, it stands as a shining example of success in the competitive food tech industry.
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