Zomato Case Study 2019 : Indian Startup

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Zomato is a food point search and discovery services which also provides restaurant services started in 2008 by Deepender Goyal and Pankaj Chaddah, currently operating in 23 countries including India , Australia , Brasil , NewZealand , Singapore , United states , etc .The company was started as ” Foodiebay “ in 2008 later renamed as ZOMATO. So Today we will discuss about Zoomato Success Story / Case Study

FOUNDERS OF ZOMATO

Founder & CEO of Zamoto
Founder & CEO of Zamoto

DEEPINDER GOYAL

Deepinder Goyal is co founder and CEO of zomato. Deepinder is from Muktsar and currently residing in Gurgaon with his family. He is an IIT Delhi alumni and worked as Managment consultant in Bains and company in Delhi before he got the idea of zomato.


Co founder and CEO of zomato
Co-founder and CEO of zomato

PANKAJ CHADDAH 

Pankaj Chaddah is COO and co founder of Zomato . He is also an IIT Delhi alumni of 2007 .Prior to zomato, pankaj worked in Bains and company .Pankaj graduated with a degree in Mechanical Engeneering . Infact Deepender and Pankaj met each other in Bains only.

The origin story – Startup idea

The idea struck Deepinder when his colleagues consistently had a demand for paper menu leaflets of different restaurants, to order food. That’s when he thought of converting these restaurant paper menus into a digital app, that is far more accessible and easier to use.

AQUISTINCES

12 Startups has globally aquired by zomato. Zomato made its first aquisition by buying Menu- Mania for an undisclosed sum in July 2014.

In September 2014, Zomato acquired poland based restaurant search service Gastronauci for an undisclosed sum. Three months later, it acquired Italian restaurant search service Cibando.

Zomato acquired seattle-based food portal Urbanspoon are an estimated $60 million in 2015.

Acquisitions of 2015 include Mekanist in an all-cash deal, the Delhi based startup MapleGraph that built MaplePOS (renamed as Zomato Base,and NexTable, a US-based table reservation and restaurant management platform.)

In 2016, the company acquired Sparse Labs, a logistics technology startup and the food delivery startup, Runnr, in 2017.

In September 2018, Zomato acquired Bengaluru-based food e-marketplace TongueStun Food for about $18 million in a cash and stock deal.

The same year, in December 2018, Zomato acquired Lucknow-based startup TechEagle Innovations, that works exclusively on drones, for an undisclosed amount.
Zomato said this acquisition will help them pave the way towards drone-based food delivery in India, creating a technology that will power hub to hub delivery network.

FUND RAISING

To get a huge startup force to their company, Zomato raised funds of around US$ 1 million from Info Edge. After their continuous success in the market, they again raised fund of US$ 3.5million from the same investor in September 2011.

Till now, the Info Edge funded $25.4 million in the Zomato and it also holds a 50.1% stake in the company. Vy Capital and Sequoia Capital are other major investors who’ve invested in Zomato.

 INVESTMENTS

Between 2010- 13 Zomato raised approximately US$16.7 million from Info Edge India, giving them a 57.9% stake in Zomato.

In November 2013
Zomato raised an additional US$37 million from Sequoia capital and Info Edge India.

In November 2014
Zomato completed another round of funding of US$60 million at a post-money valuation of ~US$660 million. This round of funding was being led jointly by Info Edge India and Vy Capital, with participation from sequoia capital.

In April 2015
Info Edge India, Vy Capital and Sequoia Capital led another round of funding for US$50 million.This was followed by another US$60 million funding led by Temask and Singapore government-owned investment company, along with Vy Capital in September.

In October 2018
Zomato raised $210 million from Alibaba’s payment affiliate Ant Financial. Ant Financial received an ownership stake of over 10% of the company as part of the round, which valued Zomato at around $2 billion.

In Earlier 2018
Zomato had also raised an additional $150 million also from Ant Financial.

Journey so far

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Foodiebay renamed as zomato because they dis not want to restrict themselves to food business so the founders came up with new name zomato.
The sudden growth in state popularity by the end of the year, they were forced to add-in more restaurants to the list making. Which is a compilation of 2000 outlets and soon managed to expand to cities :
>> Kolkata and Mumbai in 2008 , >>Bangalore and Pune in 2010.

Now for two initial years they managed to run the website without any investment or professional team. To add on to that, they found it very difficult to get details of restaurants or other eateries as well.

They now felt the need for funds and expertise for which they reached out to the potential investors. This is when they got in touch with “Info Edge” who turned out to be a god-sent angel for them.

With an increasing demand from everywhere, it was evident that it was now time for Zomato to grow and increase their reach and resources. It was time for the company to generate some income too, so they first got a revenue model in place. The revenue model developed and followed till date has the following attributes to it:

1. Advertising Restaurants: This department accounts for approximately 75% of the revenue wherein they place ads of customer restaurants.Event advertising: In this stream they earn revenue promoting events on Zomato for restaurants based advertisers accounting for 5% of the revenue.Event ticket sales: Here they take commissions on tickets sold through Zomato which accounts for 15% of Zomato’s revenue.

2. Consulting services: Restaurant chains ask for advice on where to open their next outlet/branch. They research the same and charge consulting fees for providing that info.
With ultimate growth comes ultimate success. It is evident that the company is making losses but it is also important to note that in the initial stages most of the companies go through losses because they are at a stage where they are more concerned about generating strong, loyal and reliable customer base.

Such companies with such huge financial backing focus firmly on strengthening the base of the company and making sure the company’s reach is not limited to any boundaries.

Company launced a print version of the website in associations with Citi bankCiti bank Zomato Restaurant Guide ” and It has been continued every year after 2012 .
In 2012 , Zomato expanded overseas to UAE ,srilanka , Qutar , and the uk etc and to Newzeland , Turkey , Brazil in next year.

Then zomato is expanded continously to the global market and in india also.

Zomato is ranking at 523 number by Alexa , a web traffic data analysis company owned Amazon.

Zomato claims to have 90 million monthly visits on its website and mobile application.

Story behind Zomato

Zomato logo - INSPIREMONK.COM
Zomato logo – INSPIREMONK.COM

It all started in Delhi, in the cafeteria of Bain & Company, a prestigious consultancy in Delhi, where Deepender and Pankaj worked. They saw people standing in a queue and look at the menu for the food they have to order during the lunch time. From there they got an idea of “Foodiebay” which became a prologue to make them successful Entrepreneurs.

Zomato business model
zomato open with only listing restaurants Static menu and getting reviews from users about the food served and their experience .This created a atmosphere for consumers and food point and Advertising and sponsored listing of restaurant are the main revenue earning plan.

They also started with online food ordering and delivery but its only available in Top metro cities and premium restaurants & zomato charges from 10–15 % for online ordering and extra charges on delivery by Zomato.

Online Food Ordering

Zomato started their online food delivery service. Different from other players like Swiggy, Zomato does not have their own delivery system. They let users place the order through the website or the app and the restaurant fulfil that order through by their own.

Firstly, the founders of Zomato started scanning the all the menu items in the restaurant and listed it on an Intranet website, after seeing a huge traffic to the site, they decided to launch their site publicly in the year 2008. After launching the website, they started listing restaurants in Delhi NCR, and quickly extended to Kolkata and then Mumbai.

On November 2010, Foodiebay changed its name to Zomato. The reason behind changing its name was to extend it beyond the food sector and also to avoid possible confusion with the brand “ebay”, which sounds similar to “Foodiebay”.

What’s new on ZOMATO?

Heartened by the success of its subscription service Gold, Zomato has rolled out yet another loyalty rewards program called Zomato Piggybank. This is akin to a cashback system with 10% of the order value being credited back into a user’s account as Z Coins each time they use the app to order food online.

Company Worth

Zomato is among the top start-ups in India and operates in about 23 countries including India, Australia, and the USA. In 2016, Zomato was valued at USD 1 billion.

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