Hungry? Grab your favorite meal through Zomato!
Well, the above line is not just a statement but an emotion of today’s generation. With the evolution of the digital world, having a meal delivered from the restaurant of your choice is a like a cakewalk. Now, you do not need to travel to the restaurant or stand in a long queue anymore to eat delicious food. All thanks to the food delivery apps for making this process super easy for you. One of the popular on-demand food delivery companies is “Zomato.” Do you know that Zomato has expanded a lot within 14 years of its existence?
The Zomato app will not only deliver your favorite food to your doorstep but will also help you to explore the food of new restaurants with honest customer reviews and by offering appealing discounts on various dishes. Have you ever wondered how it earns huge profits despite offering exclusive discounts and food at affordable prices? The secret lies in its business model. This article explains the “Business Model of Zomato.”
Zomato’s business model comprises of three essential components, namely-
- Working Strategy
- Marketing Strategy
- Revenue Sources
Working Strategy
The way how the business works determine the success rate of the company. You are already aware of the fact that the major function of Zomato is to recommend and take orders from the neighboring eateries and to deliver them to your doorstep. Before jumping into the core of the working strategy of Zomato, let us quickly sum up the steps involved in this food delivery app-
- Step 1: Open the Zomato app and browse the meals to order them from whichever restaurant you like. Also, you need to give the location of receiving the food.
- Step 2: The owner of the restaurant will receive an order request upon which they initiate the preparation of the dish.
- Step 3: After the dish is prepared, the restaurant owners hand over the food to the deliveryman.
- Step 4: The deliveryman delivers the meal to your location. In the meantime, you can also track the location of your order (food) on the Zomato app.
- Step 5: You can make the payment for the food either with COD (Cash-on-delivery) or digital payment channels.
- Step 6: After having the dish, you can site the ratings and reviews regarding it based on your experience. It will help other customers to decide whether to buy that meal or not.
The working strategy of Zomato involves the partnership with restaurants and retailers, hiring delivery providers, and collecting the data of users (like food choices, restaurant preferences, geographical location, and mode of payment) for smooth delivery of food. The three key players involved in the working model of Zomato-
- Users: The users are the customers like you who purchase meals from restaurants via Zomato and the food is delivered to your preferred location.
- Restaurants: Zomato offers a reliable and effective platform to local restaurants and their owners to attract the target audience (foodies) and market their business.
- Delivery Providers: They provide part-time or full-time delivery services on a contractual basis. This helps them to establish a rational revenue stream.
Zomato launched multiple features and services like Zomato Gold, Dining, Advertising, Hyperpure (Supply fresh ingredients to restaurants), Blinkit (Acquired grocery delivery service) etc.
Marketing Strategy
Do you remember the day when you heard the name or saw the logo of “Zomato” for the first time? Never mind if you don’t! Probably you might have seen the advertisement of Zomato in the banner, youtube ad, or any meme on social media. Well, these are nothing but the marketing strategy. The marketing strategy of Zomato involves a combination of online and offline marketing. These are described in the following points-
- Online Marketing– Online marketing also called “Digital Marketing” involves SEO strategy, social media marketing, email marketing, etc. It effectively hits the target audience and increases conversion rates.
- SEO Strategy– This is the backbone of digital marketing. Here, Zomato creates relevant content that is heavily focused on its users and keenly optimized for search engines like google, bing, etc. They effectively use keywords with high search volumes and relevant URLs. All these things enhance the relevancy of their pages due to which you can access their products easily.
- Social Media Marketing– Zomato has successfully mastered the technique of “Meme Marketing.” which helps to create a good amount of organic traffic. Zomato also uses paid ads campaigns to reach new users by using taglines related to restaurants and the delivery of food. They run various types of campaigns on social media platforms like Facebook, Instagram, and Twitter that help in the creation of a good amount of organic traffic.
- Email Marketing– It is one of the most effective digital marketing techniques that directly influence the target audience. It helps to create awareness regarding the products to its customers by directly sending emails to their inboxes.
- Offline Marketing– Offline marketing is effective to target a broad range of audiences. It involves television commercials featuring various celebrities, advertisements in print media, and outdoor advertisements by installing billboards, banners, and hoarding to grab the attention of the public. It also supplements online marketing.
Revenue Sources
Zomato has produced a considerable number of revenue sources that effectively aided to strengthen its presence in the food delivery market worldwide. The major revenue sources of Zomato are-
- Advertisements: As you know, advertisement plays a significant role in increasing the revenue of a company. Zomato effectively utilizes this strategy. Do you know that Zomato earns more than 70% of its revenue through advertisements? It offers a reliable advertising policy to restaurants in the form of banner ads and small pop-ups. The restaurant owners showcase their banners on Zomato to increase the visibility to the audience.
- Delivery Charges: Zomato charges a commission of 20-35% from the restaurant based on the placement of each order. It earns through the restaurants that pay commissions for each delivery. Then, it splits the earned money among the personnel and delivery partners of the company.
- Subscription Fees: It is the major revenue source of Zomato. Have you ever wondered how you get so many discounts on your favorite food whenever you search for it? The reason behind this is the huge database of Zomato that knows various details of the customer like food preferences, location, and the food you are searching for, etc. It offers analytical tools and consumer data to restaurants by charging a certain amount of fee on monthly basis. This tool is also called “Zomato Order.” Thus, restaurants use this tool to flash their appealing discount offers on your feed.
Latest News: Empowering Zomato’s Delivery Partners with Vital Lifesaving Abilities
Zomato introduced a first-responder training program for its delivery partners in India. The initiative aims to teach delivery partners medical first-aid & CPR through certified training programs under the ‘Serving India’ initiative. Over 5,000 delivery partners across Delhi-NCR, Mumbai, Bangalore, Hyderabad, and Pune have been trained as first-response emergency heroes.
Zomato founder Deepinder Goyal shared a video on the X platform highlighting the initiative, calling Zomato delivery partners ‘India’s Emergency Heroes.’ Rakesh Ranjan, CEO of Food Delivery at Zomato, stated that over the past three months, more than 5,000 delivery partners have received professional first-responder training, including first-aid, BLS, and CPR.
Each trained delivery partner will receive a comprehensive first-aid kit to provide immediate medical support to peers and customers.
After this news, Zomato’s shares increased by 2.25% to ₹122.55 at 1:45 pm on Thursday (4th April, 2024). SoftBank Group divested a 1.1% stake in Zomato for ₹1,128 crore through an open market transaction earlier this month.
After the transaction, Softbank’s shareholding in Zomato decreased to 1.09% from a 2.17% stake.
Conclusion
The business model of Zomato has been proven to be highly effective to reach heights in the food delivery market in a short period. Its key activities include the management of various networks of restaurants and customers, advertisements, and customer care service to increase the brand image by providing the best quality meals at your doorstep within a short time.
