SUMMARY
The On Demand Food Delivery Business Of Zomato Has Witnessed Impressive Growth Since Launch in June 2015
Just over a year after Zomato hit the 1 Mn mark in orders per month, the foodtech unicorn has managed to triple the numbers in an unprecedented move of ingenuity and resourcefulness. Launched in June 2015, Zomato’s on-demand food delivery service has raked in over 3 Mn monthly orders for the first time in July this year.
In a recent post on the company blog, Mukund Kulashekaran, VP Global Growth/Business Head of Online Ordering stated, “Yes, we will keep telling you about every millionth order that we hit in a month. It means a lot to us, and we obviously can’t control our excitement.”
According to the post, it took eight months for the company to reach the second million in monthly food delivery orders, and around four months to attain its latest feat.
As per the post, Android users currently account for 51% of all orders booked through Zomato’s app. Around 38% come from iPhones, while 11% are made it through the website. Nearly 65% of the first-time users ordered something again within 12 months of registration. As claimed by Kulashekaran, Zomato’s current CAC is very low, with customer acquisition taking place organically through the company’s listings business.
Mukund added, “For everyone who has given Zomato Order a shot – we thank you for giving us an opportunity to serve you. It is both humbling and exhilarating for us to get a shot at building the first large global consumer internet brand, based out of India. We truly value your patronage and hope that we continue to have your loyalty and support while doing that.”
To enhance customer experience, the foodtech unicorn is offering expedited delivery for users who are feeling under the weather. Zomato has also instructed restaurants on its platform to stop sending plastic cutlery with orders, in order to reduce plastic waste.
Zomato Unicorn: A Story Of Resilience
Founded by Deepinder Goyal and Pankaj Chaddah in 2008, Zomato has raised over $200 Mn in funding and made 10 acquisitions. InfoEdge holds a 47% share in the company. The company’s journey to the top is nothing short of riveting, full of spectacular highs and lows. In 2015, amidst rising losses and competition, the foodtech unicorn made headlines for showing the door to 300 employees.
In May 2016, Zomato rolled back operations from nine countries out of 23 international markets. Around the same time, investor HSBC Securities and Capital Markets (India) marked down the company’s valuation by half to around $500 Mn. By adopting a strategy focussed on diversification, and redesigning its ad serving product, the unicorn managed to cut losses by 34% in 2016-2017.
In its annual report for FY17, Zomato reported an 80% surge in revenue to around $60 Mn. The restaurant discovery and food delivery platform witnessed an 81% drop in the annual operating burn for FY17 at $12 Mn compared to the $64 Mn in FY16.
In May this year, the nine-year-old foodtech startup was reportedly the victim of a security breach, where the records of over 17 Mn users were stolen from its database. The information included user email addresses and hashed passwords. Just a day later, the company confirmed that it managed to contact the hacker.
In an official statement, Zomato had stated at the time, “The hashed password cannot be converted/decrypted back to plain text – so the sanctity of your password is intact in case you use the same password for other services. But if you are paranoid about security like us, we encourage you to change your password for any other services where you are using the same password.”
During the same month, it was reported that the unicorn was competing with UberEATS to acquire Bengaluru-based hyperlocal delivery startup Runnr.
The State Of The Indian Foodtech Industry
According to a report by RedSeer Consulting, online food delivery grew at a pace of around 150% to reach $300 Mn in GMV in 2016. And the online food delivery players handled, on an average, 160K orders in a day with an average order value of $5. As per Inc42 Datalabs, 50 startups in the foodtech space raised $152.3 Mn funding.
In May 2017, rival Swiggy raised $80 Mn in a round led by Naspers. The company, however, has been embroiled in a number of controversies. The story surfaced last month when four anonymous Swiggy employees published a Tumblr blogpost, titled “A House of Cards,” where they claimed that Swiggy cheats its restaurant partners by rapidly increasing commissions and violating contractual obligations and promises with the “so-called” partners.
According to them, Swiggy employees were made to lie about market share as well as order volume to restaurant owners to project inflated growth. As per the blogpost, the highest order volumes Swiggy ever reached was less than 3 Mn orders a month but the company has been inflating the number to 4 Mn in the media after it revoked access to the order volume tracking dashboards for the employees. The whistle blowers also accused the startup of cheating users by deliberately adding good reviews on social media and hiding genuine reviews.
As a response, Swiggy CEO, Sriharsha Majety released a blogpost soon afterwards, calling that the anonymous blogpost falsified with completely incorrect data and details. Majety added that the writers of the post had themselves fudged the numbers to malign the company’s image. According to him, Swiggy has clocked positive growth in terms of daily orders every month till January 2017.
He further stated that, in November 2016, Swiggy had a total of 63,804 orders per day, which grew to 78,417 daily orders in January 2017. The company’s order volume, according to Majety, currently stands at a daily average of just over 121K.
At the other end of the spectrum, Google’s Areo launched in Mumbai and Bengaluru to offer hyperlocal and food delivery services to users. UberEATS has expanded to Gurugram, Delhi and Mumbai.
Despite large-scale shutdowns in the hyperlocal segment last year, Zomato has remained relatively unscathed. Given its current growth rate, the unicorn is well on its way to emerging as a leader in the on-demand food technology market.
