Zomato raises $62 million: you too can generate huge revenues by building a Zomato like food delivery app
Posted on March 4, 2019 By Ankit Virani
The Zomato app is used for discovering restaurants and is one of the famous food delivery platforms. According to a news article, it is said to be raising $62 million in a fresh round of funding led by Naspers-backed German food-tech major Delivery Hero.
Zomato’s stakes and other investors
The capital funding is expected to value the Gurgaon-headquartered company at about $2 billion. The funding is a part of Zomato’s ongoing Series I. According to the filing submitted to the Registrar of Companies, Chinese investors Shunwei Captial and Saturn Shine have also participated in the funding round.
Zomato will get a 2% stake in the Deepinder Goyal-led company, Deliver Hero after its 3.5 billion investment in Zomato. And Shunwei Capital’s investment of 350 million will give Zomato a stake if 0.23%. And Saturn Shine pumped in the rest for Zomato to have a stake of 0.36%. These investments have been done immediately after Ant Financial and Sequoia capital backed Zomato to raise $40 million from the US-based investor Glade Brook Capital Partners.
Delivery Hero, a Berlin-based business sold the FoodPanda India business to the ride-hailing company Ola. It has Naspers as one of the largest institutional backers. Naspers is also the largest stakeholder in Swiggy.
Zomato’s advance plans
Zomato has announced the opening of 30000 sq ft ‘Hyperpure’ warehouse in Bengaluru which started in August 2018. It sells supplies like vegetables, fruits, meat, dairy, and beverages to restaurants through a technology-driven platform. Within the three months of launch, Hyperpure, Bengaluru grew and started to supply more than 350 restaurants in Bengaluru by November 2018 and they have more than 1000 merchants today.
In one of its statements, Zomato stated that it works directly with a large network — farmers, mills, producers, and processors —which enables it to provide high-quality-produce at competitive prices. The food-tech firm has more than 100 suppliers in the system.
Zomato has plans to open such Hyperpure warehouses in Delhi and other nine cities by the end of 2019. It also plans to expand to international markets eventually.
This is an out of the box idea and one of its kind initiatives at a scale that breaks down the supply chain so that fewer people are involved and the work is done more efficiently. The founder of Hyperpure, Dhruv Sawhney said that they aim at reducing the food wastage. He also mentioned that each ingredient that is stored at Hyperpure has each little details right from which farm has it arrived. He also mentioned that in the coming future, the restaurants can tell you where your favorite veggies have from and when they have been harvested.
Zomato Media and other business development of Zomato
One of the Zomato’s units, Zomato Media has also raised an amount of $39.7 million in the last month. Meanwhile, Zomato is also negotiating for selling off its business in UAE to Delivery Hero. These developments come in when Zomato’s valuation is going up to $3 million and it has raised $1 million amount. They say these developments will turn profitable by 2021. Zomato is spending a lot of money to give tough competition to Swiggy.
The new hands-on feature Zomato added for the Indian customers:
After the huge success in UAE and Portugal, Zomato has recently launched its Gold subscription in India. It got more than 26000 subscribers within seven to eight hours of its launch. People went crazy to buy the subscription for complimentary meals and drinks. Within the first half of the day, Zomato increased the limit of subscribers and the price.
Mind-blowing, isn’t it? Curious about how did it happen? Let me share some facts that would help you understand the strategy better.
To make this huge success come true, Zomato did a lot of research. Firstly, they knew that the Indian users and their needs were different from any other users around the world. They were aware of the fact that works outside India might not necessarily work in India. They made some tough decisions that supported their luck and the launching of Zomato Gold to the fullest.
A few major factors on which they focused on were:
At the launch of Zomato Gold, they wanted to keep things very simple for the user. The key phrase as they themselves say was “T&C free”. They kept a standard offer for each participating restaurant. Also, they involved only those restaurants which could really fit in their regime. They made the subscription offer hassle-free for the user.
Zomato made sure that they focused more on quality rather than quantity. They wanted to provide their customers with quality food. So, they did not involve all the restaurants in their endeavor. Instead, they only targeted a few restaurants that could provide an excellent service to the Zomato customers.
» Recognition of difficulties
A good businessman always considers what could go wrong. Zomato too focused on the things that were not working out. They went to each restaurant and trained the staff. They didn’t care when they had to take a call to refresh the training. Eventually, the denial of service ratio at the restaurants was brought down at 0.5%.
» Importance of customers
Neither the organization policies nor the growth targets but the customers are what matter the most. Zomato made sure each of the customers was treated well. According to them, word of mouth is most important. “40% of our sales were referral driven”, they quoted on their blog. The stressed on listening to the customers as well as partners in business (restaurants). This gave them insights about what was working and what was not,
» No loss No gain
While launching, they did not care if the prices set for the launch of Zomato Gold were too low. They just wanted to optimize for trials and not for revenue. But it worked and the company could generate a huge revenue by including the subscription feature in their app.
Overall, the strategy worked and Zomato earned huge revenue which became evident when they earned so many subscribers. Indeed, we can infer that including the subscription feature in your app surely helps in a more reliable income.
Zomato Gold is moving now to Auckland, NewZealand to beneficiate the users there too!
Building a Zomato like app requires minimum 900-1000 hours depending on which features you choose for your personalized app.
According to App store rules, building an exact copy of Zomato would not get you much audience. Our research team can help you in deciding the innovative features for your food delivery app to make your business stand out.
Get in touch with us to discuss in detail the business design and modules of your food delivery app. Our trusted research team will be happy to solve all your queries and get you the best ideas to widen your customer base.
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