Zomato's Road to "Eternal" Bliss

So why does Zomato want to be a house of brands / businesses and name themselves “Eternal” ?

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It is an important question that needs some crystal gazing! 

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So, we know that Food Delivery is the highest contributor to Zomato’s overall revenues, nearly 80%. And in the last quarter there was some uptick in the Food Delivery business for Zomato which also resulted in a 20% uptrend on its stock prices. 

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The online food delivery market – currently a duopoly of Swiggy and Zomato has grown to a large extent on account of high burn rates that both these companies have. The market potential is huge however the unit economics for both these companies would be worrisome to investors.

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As we can see from this infographic of Zone-wise market share for H1 2022 – Zomato has inched towards a higher share in all zones except South Zone. Now South Zone has been a traditional stronghold for Swiggy thus breaking users away from Swiggy in the South Zone would always remain an uphill task. Additionally, South Zone due to higher urbanization has the highest contribution toward overall food delivery volume i.e. nearly 40% of all food delivery orders originate in the South Zone.

Furthermore, Large Restaurant chains like Dominos, McDonald's, KFC, and Rebel food brands are trying to fulfill orders directly on their own. This is happening now because these brands are sufficiently well known and don't need to rely on Food Delivery apps for “discovery” in the user journey. And the exorbitant commissions (15% to 30%) that the food delivery apps charge also reduce their profitability. 

Thus for Zomato, to build a more positive narrative for the investor community there was a need to demonstrate the strength of other businesses – Blinkit (quick commerce), Hypersure (which delivers ingredients and kitchen supplies to restaurants) & Feeding India (a nonprofit entity focused on solving hunger problem in India). And probably Zomato’s road to “Eternal” bliss!

Consumer behavior data is crucial to know and should get baked into the strategy for efficient execution. This can be done effectively by using Vumonic’s behavioral data for food delivery or eCommerce for many different categories.

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Written by: Anupam Asthana

Date: 04 Aug 2022

Vumonic Datalabs is a global consumer intelligence platform. We provide high-quality, deterministically linked, large structured data that can be used to derive deep consumer,  business, and market insights. Our proprietary data pipelines deliver unbiased actual transaction data collected in a privacy and secure manner via large global panels. 

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