ZOMATO CASE STUDY

1.1INTRODUCTION

Zomato initially named as Foodiebay was started in 2008 by Mr. Deepinder Goyal. It is a
restaurant searching platform providing in-depth details with autonomous reviews and ratings.
Foodiebay, the initial name was changed to zomato in November 2010 to increase their reach
among people.

To differentiate themselves from their competitors, Zomato concentrated on adding approx.

18,000 new places to eat from. Along with they also decorated many special features, such as
pointed to particular dishes or opening times”.

To be the largest resource in food supply market, Zomato bought urbanspoon, a leading
restaurant service providing portal for $52 million to enter US, Canada and Australia to leverage
local insights and experience and to expand their business in overseas seeing the future goal and
objective.

.
 Vision
 To expand to more 50 countries

Mission
Our mission is to ensure nobody has a bad meal

Success Factor:
 First mover advantage
 Strong content platform
 Efficient employees
 Good rating mechanism and social platform
 Funding from experienced source
 Strategy of Zomato: Zomato works with keen interest on various strategies to achieve their
goal. It includes
 Financial strategy: To increase their fund and revenue
 Marketing strategy: To tap their customers from across the globe
 Growth strategy: To grow continuously and increase their customers and page traffic
 Globalization strategy: To expand themselves across the whole globe as a leading service
provider

Marketing Strategy
 Featured and user friendly website
 Global mobile app
 Focusing on digital marketing channels for potential customers
 Acquire the competitors: To be the largest resource in food supply market, Zomato bought urban
spoon for $52 million to enter US, Canada and Australia
 Simpler review and rating system
Integrating other tools in their marketing strategy has given them wonderful hike in their
business.

 Sales promotion: Coupons and price-offs

 Direct Marketing: Phone call and direct mail

INVESTMENT

In August 2010, Zomato got its first round of funding of $1million from Info Edge, India. And in
September 2011, got its second round of funding of $3.5million from the same financier. Next
year Zomato upraised its third round of another $2.5 million from the same investor and again in
early 2013, Info Edge funded fourth round worth $10 million which gives them a 57.9% stake in
Zomato.
Seeing the future and growth of Zomato, Sequoia Capital and Info Edge, India in November
2013 funded Zomato with $37 million. Info Edge now owned 50.1% of Zomato on an
investment of INR 143 crores. The total funding raised by Zomato till November 2013 stands at
$53.5 million.

In November 2014, Zomato came up with a fresh round of funding of $60 million at a post-
money valuation of ~US$660 million. This round of funding was jointly headed by Info Edge
India Limited and VY Capital, with involvement from Sequoia Capital. This made a total
funding of over US$113 million for Zomato.

Recently in a fresh round of funding in April 2015, Info Edge, India has invested an amount of
Rs 155 crore in Zomato.

Info Edge said in a statement “Being Info Edge’s fair share of Zomato’s recent fund raises of
USD 50 million”. Upon completion of the allotment of shares, Info Edge’s aggregate investment
in Zomato will be about Rs 484 crore.

As the website was launched, it became popular soon and expanded rapidly, covering many
important regions of India including Kolkata, Mumbai, Bengaluru and Pune by the year 2010.
Apart from being a service provider within India, Zomato.com now has branched to overseas in
the regions of Philippines, New Zealand, Qatar, South Africa, Sri Lanka, the United Arab
Emirates and the UK as well.

The website covers a list of over 1, 20,000 restaurants across all these regions catering to more
than 15 million customers worldwide. With its headquarter in New Delhi, Zomato.com is
providing career opportunity to over 350 employees all across the globe.

Social media Strategy

Zomato uses different platforms to engage their customers with them.

Facebook

There is a huge engagement of customers on Facebook. Zomato has more than 600k strong
Facebook community.

Twitter
Twitter is a place where Zomato is sparkling. It has more than 114 k followers there. Used as a
conversation platform with the customers, Zomato is doing a great job in engaging their
customers on their page. They answers all the queries raised over the platform by the customers.

Blog

Sharing and updating with all the latest updates is a key point for any organization. Zomato uses
their blog as their mouthpiece to share all the latest updates.

Pinterest

The platform shares the food experience with great content to attract their customers. The
company needs to do a lot of job to make its followers on this platform which will certainly work
in their promotion.

Instagram
This platform lets the user share the foodie photographs just by sharing it using the tag # Zomato.
The image automatically gets shared on the microsite.

First mover advantage – One of the best competitive advantages of Zomato is that it is the first
mover in many of the nations where it is establishing itself. Directories and other forms of
restaurant ratings might exist. But as an app Zomato is excellent and many countries (like India)
have loved the usability of the Zomato app.

Evergreen industry – The restaurant industry is an evergreen industry. Sure, there may be
recessions and other downturns which might affect the industry. But overall, this industry is
going to stick around at all times and is only going to grow with rising disposable income.

Fast Expansion – It is appreciative that Zomato has expanded so fast. It is already in 24 countries
and is expanding year on year.
SWOT ANALYSIS

STRENGTH

Fantastic design of the app – zomato has regularly won awards for its app design and for its user-
friendliness. The App design is fantastic and it helps you discover restaurants nearby as well as
in an area you are going to visit.

Number of users – zomato has a huge number of users using their app. At the same time, the site
also has 90 million visitors a month approximately. With so many users following the app and
site, there are more reviews and hence more chances to find better restaurants.

Focused approach – The brand has a very focused approach and has always tried to bring the
most of out of its unique offering. It is well connected with restaurants and regularly takes
feedback from customers as well as restaurants. This focused approach has also helped the brand
image and reputation of the firm.

Excellent funding available – zomato has picked multiple rounds of funding over the years and
because it is now so well established in many countries, there is a lot of funding available for the
app.

Multiple acquisitions – zomato has acquired multiple companies most of which are software
or technology related.

Already turning profits – In April 2017, zomato was profitable in all 24 countries it was
operating in. For a company which is a start-up and has so much funding, it is a big thing to turn
profitable because many funded organizations are still declaring losses even after a decade of
establishment.

WEAKNESSS

Security issues for the app – A major issue for zomato in the past has been some security issues
due to which the app was hacked and at least 17 million users data was copied. Such security
issues are a nightmare for internet companies.

Still a lot of expansion required – Considering that the app has established in 24 countries, there
is good expansion. But at the same time, the app has been started 7 years back and with the
amount of funding available for zomato, the expansion can be much faster. It is allowing other
services to establish themselves in this niche before it reaches their country.
Word of mouth and Facebook check-ins – Besides such apps, in many places word of mouth still
trumps apps and at the same time, Facebook check-ins are a strong competitor
wherein people might not need zomato. Thus, it is an app for early adopters but definitely not for
laggards.

OPPOURTUNITTIES

Further expansion – The number 1 opportunity for zomato is to expand to more countries and
establish its base faster. Service industry has a major problem that services can be copied very
fast and very easily. As a result, it is critical for zomato to establish and expand itself faster.

More acquisitions – There are many small players in this space. zomato can acquire several of its
competitors and at the same time, it has to keep an eye on the tech industry and acquire any
tech innovation it can get its hands on to keep on rising.

Cloud restaurants – zomato is coming up with the concept of Cloud restaurants wherein
restaurants will not have to get a physical space to actually sell their food products. Instead, they
can sell from zomato.

Creating a community – Zomato does have a huge following but the users do not interact with
each other. Creating a forum and a community out of the users already following Zomato can be
a huge benefit for the brand.

THREATS

Google’s schema module – One of the major threats zomato faces right now is the Schema
module of Google where in google locations itself is getting in restaurant recommendations.
Even google homepage shows the google maps page where you can search for restaurants within
your locality. Google being such a big brand, zomato faces huge competition from them.

Market followers and challengers – In the service industry, it is very easy to replicate the success
of another service product or offering. Similarly, marketing followers and challengers can slowly
take away the market share of zomato.
PORTER ‘S 5 MODEL ANALYSIS

THREAT OF NEW ENTRANTS

New entrants in an industry bring new capacity and the desire to gain market share. The
seriousness of the threat depends on the barriers to enter a certain industry. The higher
these barriers to entry, the smaller the threat for existing players. Examples of barriers to
entry are the need for economies of scale, high customer loyalty for existing brands, large
capital requirements (e.g. large investments in marketing or R&D), the need for cumulative
experience, government policies, and limited access to distribution channels.

Zomato have the threats of new entrants because the available of its competitors have
reduced his market share not at great extent but still they effect on the market share of the
company. The availability of its competitors are SWIGGY, UBER EATS and more. The new
entrants needs license, insurance, distribution channels and other qualifications that are
not easy to obtain when you are new to the industry. Furthermore, it can be expected that
existing players have built up a large base of experience over the years to cut costs and increase
service levels. A new entrant is likely to not have this kind of expertise, therefore creating a
competitive disadvantage right from the start.

BARGIANING POWER OF SUPLIYERS

This force analyzes how much power and control a company’s supplier (also known as the
market of inputs) has over the potential to raise its prices or to reduce the quality of
purchased goods or services, which in turn would lower an industry’s profitability potential.
The concentration of suppliers and the availability of substitute suppliers are important
factors in determining supplier power. The fewer there are, the more power they have.
Businesses are in a better position when there are a multitude of suppliers.

Bargaining power of buyers in the food industry is low. Customers are able to check the
price of the different restaurant some time when they are searching for new restaurant.
Zomato is one of that platform which gives loyalty points to each customer on ordering of
food in terms of piggy bank points. Zomato gives various discount to the past purchase
customers and show restaurant preference according to them.

THREATS OF SUBTITUTE PRODUCTS

The existence of products outside of the realm of the common product boundaries
increases the propensity of customers to switch to alternatives. In order to discover these
alternatives one should look beyond similar products that are branded differently by
competitors. Instead, every product that serves a similar need for customers should be
taken into account.

Zomato is the online ordering platform and substitute are available for the online platform.
We can order through restaurant directly but through zomato we can order from different
places of the city at one place.

BARGIANING POWER OF BUYERS

The bargaining power of buyers is also described as the market of outputs. This force
analyzes to what extent the customers are able to put the company under pressure, which
also affects the customer’s sensitivity to price changes. The customers have a lot of power
when there aren’t many of them and when the customers have many alternatives to buy
from. Moreover, it should be easy for them to switch from one company to another
Now a days while ordering food on online platform like zomato, swiggy customer is
searching for same food at low cost. So customer search on both platform which give him at
low cost or either it give a loyalty benefits to the customer.

RIVALRY AMONG EXSISTING COMPETITORS

Rivalry among its existing customers is less If the industry consists of numerous competitors,
then Porter rivalry will be more intense. Where as if the competitors are of equal size or market
share, then the intensity of rivalry will increase. The intensity of rivalry will be high if
industry growth is slow. Same way in case of online food ordering zomato have its competitors
like swiggy which also have a market share equal to zomato. So that’s why zomato have its
rivalry competitior available in market which want to be acquire the more market share. So
zomato would move strategically so that its market share will be increase from its rivalry
competitors.