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Ecommerce: Digital Markets, Digital Goods 421

o
VTER
nCTIVE SESSION: TECHNOLOGY
mato ScriptingSuccess With E Com
F

gV:Rddin the year 2008 as

ho is the GEO of the
FoodieBay by Deapln With the owners
Y Val tirm at tobuild their dining options. Zomato
ankajankaj Chaddah, Zonmato was rechristened present)to has an extensive database of 1,4 million restaurants
t ame in ini the yoar 2010. An
name across 23 different
countries, and it allows the custom-
carnt online restau ors to read menus, make table
arch and covery service providor, bookings, and order
esence in 23
Zomato tood for delivery by accessing this database through its
A A Y 2 2 0

countries. Its core fea

2 0 r

online portal. Although, there are other players ofter-

chude provision of intormation and
reviews
ratnts through its portal, scanned
menus,
ng similar services such as Open Table, Just Eat, and
Deliveroo who have been doing this for years, Zom-
and geocoded coordlinates for restaurants. It
ndtas
ato stands apart because of its low overheads and a
llaws the userS to create their own network of
forward-thinking customer acquisition model. Goyal
es tor rsonalized recommendations. The firm adds that his customer acquisition costs are consid-
sbeen fortunate enough to receive substantial
erably lower than the competitors who spend up to
farndin
ing from investors with Info Edge India being $15 per customer; in comparison, Zomato spends an
minent one, At thesame time, it has been able
average of just $0.04 per customer. After a customer
spread its wings globally through some major places his first online order, it adds to the profitability
Aquisitions. of the firm as at this moment Zomato breaks even on
It India, tood oriented online commerce services its costs with the customer. Additionally, Zomato has a
have never received substantial market response. large registered user base (19 million registered users

And Zomato, which is one of the biggest online food till March 2016), so it charges relatively high for a ban-
Gant operating in India, too took a dip when its net ner space on its mobile application.
iss amounted to R590 crore in the 2015-16 fiscal. The company promises fresh data to its custom-

However, it is worth mentioning that despite the ers. The data is refreshed every three months; hence,
insses, its position was far better than its competitors, it remains relevant and updated. For this purpose,
Zomato has maintained its own team of foot soldiers
and Zomato was able to quickly revive from the losses
W numbers: Zomato saw a who go to each restaurant and maintain their data.
as seen from the following
ng million in This feet-on-street model sure differentiates the firm
surge in the number of orders per day (2
from the rest, and although the process is too inten-
2017 as compared to 0.5 million in 2016). The firm's
sive, the management believes this to be its strength.
CEO, Deepinder Goyal, believes that constant effort
er The collection of first-hand information from cafes,
tDwards improving its product with less room
for error
IS the key to growth maintenance of the food giant. bars,and restaurants allows the presence of rich
content on their website, and this is what (real-time
and
his holistic experience of restaurant discovery refreshed data) attracts the customers back to Zom-
Gining provides them with an edge competition.
in
ato. Another feature added on its portal is the ability
nd an insight
Zomato's business model is worth about
es in the food of the users to review and give their opinions
Decausethat enables it to survive any crisis visited. The users
a food space that they recently
for that matter. A
ndustry, or the Indian economy are also encouraged
to build and share the stories
is restaurant
OTe feature of Zomato's business model which make the site more
75 per- of their food experiences
accounts for approximately
which social and helps to gain popularity.
advertising cave-in to
While other competitors made by the firm have
t Of its revenue.
Zomato is A number of acquisitions
usiness owners froma variety of segments,
diversification. For
allowed it an unprecedented
based in the coun
specifically food delivery start-up, Runnr,
Cused on restaurateurs
owners,
Zomato example, acquisition of
of operation. For these business in food delivery services,
y
allowing in 2017 has let it diversity
platform Zomato had overlooked in the past. With this,
acts highly targeted advertising
as
its portal an area
ed interact through
Customers to effectively
 422 Part Three Key System Applications for the Digital Age
Zomato has also launched a new service called Zom-
ato Valet which focuses on food delivery from high-
value restaurants who don't deliver on their own. The
main motive is to seek bulk orders for food delivery,
such as, on some special occasion when the
average
order value is expected to be high. The delivery for
the same would be fulfilled through a hybrid delivery
model implying that parent company alone where
the order has been placed would not deliver the com-
plete order. As in the case of Zomato, almost 93 per
cent of Zomato's order fulfilment occurs through the
restaurants themselves where the orders have been
placed, while the remaining 7 percent is fulfilled by
third-party logistics firms that have been roped in.
The firm made a major acquisition for $52 million
in an all cash-deal to acquire Urbanspoon and thus
made an entry into the biggest market of all, the
United States of America. Urbanspoon has a strong
presence on mobile applications in the US, Australia,
Canada, New Zealand, Ireland, and UK, which allows
Zomato to make foray into these markets as well. The
firm also tied up with Ola for the year 2017 to 1let their
customers use either firm's application to order their
offering or to make payments. For example, Zomato
app users can book Ola rides through the other's
app, while users can pay for Zomato online orders
using Ola Money. A Zomato micro-app has also been
launched for Ola Play which provides many features
of Zomato to Ola Play customers. A similar tie-up of
the firm with Uber lasted for a year till 2016. Lately,
the two have become rivals, following the launch of
Uber Eats, an online food ordering company, in India.
In 2015, Zomato also acquired MapleGraph (which
had built MaplePOS), a cloud-based point-of-sale (POS)
system for restaurants. This has been renamed to
Zomato Base, and it is an Android-based POS systemn
which is customizable. With this acquisition, inven-
tory management at the firm has been automated, and
it also allows payment through debit and credit cards
via an in-built payment solution. Besides this, Zomato
Base also includes features for menu management,
recipe management, CRM module, data analytics,
printing of electronic receipts, etc. What really differ-
entiates Zomato is the use of technology in not just
building customer base but also in fostering relation-
ships with restaurant owners. The food-tech company
leverages technology to business owners to facilitate
their services and aid in their growth. It is also creat-
ing a marketplace for these restaurateurs to purchase
products such as cutlery or restaurant related techno-
logical solutions, and also aids in licensing and choice
of vendors. This aims to provide a one-stop platform
for complete operation of a restaurant. Zomato is plan-
ning a massive rollout of this feature and aiming to
eventually become an integrated platform for intera
tion between business owners and customers.
Another product which is being offered by the
firm is that of online table reservation and manage
ment under the name Zomato Book. The response
towards the product is extremely variable depending
on the country of operation as culture influences user
behavior. For example, in markets such as London and
Dubai where users are accustomed to advanced table
reservation, the product is a success. While in India,
efforts are being made by the company to promote the
feature and gain customer attention. Another feather
in the Zomato's cap is the 'Name and Shame' feature
When Zomato finds a restaurant guilty of obtaining
reviews unethically, it displays a yellow badge against
that restaurant (which stays on the portal for 30 days);
this badge serves as a warning to consumers before
they browse through the review. Although this has
fetched mixed response from both consumers and
owners, the firm plans to continue with this feature.
Zomato Treats, the latest concept launched in June
2017, treats subscribed users with free desserts. Users
who have been loyal to the firm are invited for a
low
fee Zomato Treats membership; each time they place
an order with the partnering restaurant, they receive
a complimentary dessert for free. The firm has seen
increased repeat usage that is a 25 percent increase
in order frequency from the users who have already
received the free dessert through this program. The
company is working on increasing revenue profit-
ability and reduction in inefficiency. Even in its inter
national operations, Zomato is focusing on a few key
markets and slowly expanding to reduce cash burn.
And the company is a firm believer in the use of tech
nology to sustain growth and reap profits.
Sources: As accessed on 31 December 2015 at
5pm IST-http:/
trak.in, please read: Zomato-Maple Acquisition, Zomato Base
POS
http://tech.economictimes.indiatimes.com, please read: Zomato
Base: Marketplace RestaurantOwners; https://m.yourstory.com,
please read: Zomato Acquires Maple Graph, Launches Zomato Base;
https://www.idealsvdr.com, please read: Indian Unicorm: Zomato;
https://m.yourstory.com, please read: Zomato Yelp!; http:/7
economictimes.indiatimes.com, please read: How Zomato Managed
to Survive the Carnage in The Food Tech Sector; http://www.
thehindubusinessline.com, please read: Doing Food Delivery Aline
is Not Sustainable: 2omato CE0.
 Digital Markets, Digital Goods 423
Chapter 10 E-commerce:

CASE STUDY QUESTIONS

3. How have acquisitions facilitated
in flourishing
detailed into the core feature of Zoma-
insight
1. Give
Zomato's online ordering business?
to's business model which is restaurant advertising. features of
advan- 4. Discuss with examples some of the key
to Zomato'scompetitive they dif-
2. How does data add role model in Zomato's e-commerce services. How do
tage? Discuss the of feet-on-street ferentiate the firm from its competitors?
the same.

Bureau of
of that a m o u n t (U.S.
about $6.2 trillion to
contributing e - c o m m e r c e is expected
(online B2B) By 2019, B2B
estimates).
the Census, 2015;
authors' of conducting trade
the United States. The process
in
grow to about
$8.6 trillion and requires significant
human intervention;
complex each
business firms
is
r e s o u r c e s . Some
firms estimate that
among signiticant
on averagc, at least
therefore, it
consumes
products costs them,
order for supPport includes processing
purchase Administrative
overhead
Corporate overhead.
telephone and
$100 in
administrative
spending time using the for
decisions, arranging
purchase for purchases,
approving and arrange
paper, products
this adds up to
trillions
machines to search for Across the economy,
fax automated. If
ceiving the goods. processes
that could be
shipping entire
and parts of the
procurement
spent for automated,
of dolla trade were
trillions of dollars
nf inter-firm a n a t
literally