In the fiscal year 2023, Zomato has gained more strength with 647 million orders to 58 million customers, with a total order value of Rs 263.1 billion across more than 800 cities in the country. “Our extensive reach has brought us closer to many more customers nationwide. As of June 2023, our platform had 226,000 average monthly active food delivery restaurant partners and 352,000 average monthly delivery partners,” Rakesh Ranjan, CEO, Food Ordering & Delivery Business, Zomato, told FinancialExpress.com.
The technology platform that provides solution for searching and discovering restaurants, ordering and delivering food, attributed the growth to factors like “recovering demand since February and the seasonally strong nature of Q1, increased adoption of our Gold program, team execution on all fronts – our relationship with restaurant partners, ensuring delivery partner availability and customer-first service”.
Here are the edited excerpts from the interaction…
Give an overview of Zomato’s food ordering and delivery business currently.
For our restaurant partners, we provide industry-specific marketing tools to engage and acquire customers, along with a reliable last-mile delivery service. On the other hand, our delivery partners benefit from transparent and flexible earnings opportunities and insurance coverage, including accidental, medical, disability, and death coverage.
Further, our initiatives, such as “Intercity Legends”, affordable home-style meals starting at prices as low as Rs 89 with “Zomato Everyday”, further enhance our value proposition for customers and partners. We continue to work hard and have a deep commitment to the well-being of our stakeholders, including customers, restaurant partners, and delivery partners.
Tell us more about your role and trajectory as the CEO of the food ordering and delivery business at Zomato.
A CEO role at Zomato is not a typical one. We have a very flat organization; everyone, including me, has very high ownership and accountability. A large part of my role is to obsess over the rigor of day-to-day execution and customer-first thinking. I consciously believe that one has to be very close to the lives of our stakeholders to understand their needs, aspirations, and frustrations.
I started as a Zoman ~6.5 years back when I joined Zomato from BCG as the sales and strategy head for Zomato GOLD. I co-created GOLD in its early days and ramped it up across three countries – India, UAE, and Portugal – in a short span of 2-3 months. Soon after, I moved to the delivery business (online ordering) where, over the next 3 odd years, I shaped our sales, Supply and city operations functions. After our recovery from the pandemic, I started focusing on building new businesses for Zomato – a stint that was fundamental to me learning the nuances of operating a business independently in unfamiliar waters. Before rejoining online ordering as the CEO, I led our B2B business (Hyperpure) as its CEO. As the CEO of Hyperpure (tenure of ~18 months), along with our teams, we worked on scaling the business and widening its presence and assortment.
How has the food delivery landscape transitioned over the years, and what has been Zomato’s role in shaping the narrative and consumers’ lifestyles?
During 2015-2017, India’s online food delivery market was just getting started. Restaurants slowly became more open to online ordering as more and more customers started looking for delivery options. 2017-2020 – a high growth phase – many basics for food delivery and delivery at large got established through better technology, higher user adoption and more openness from restaurant partners.
Urbanization, rising disposable incomes, and an increased preference for online shopping have further driven the growth of this industry. At Zomato, we have always prioritized innovation, safety, and convenience for our consumers and partners. We remain committed to making ordering food more accessible by offering features like live order tracking and secure payments to enhance the overall experience.
As a platform, we have expanded into hyperlocal services and introduced subscription models, further influencing consumers’ lifestyles. Embracing emerging trends like quick commerce, cloud kitchens, Zomato AI, and sustainable practices to meet the evolving needs of our customers and restaurant partners.
Tell us more about the initiatives launched by Zomato (Gold, food trends, etc.)? What kind of revenue generation comes from these initiatives?
All business initiatives by Zomato are stakeholder-first and are focused on providing a seamless experience to all our key stakeholders. including our customers, restaurants, and delivery partners. Most of our offerings are experience first and not revenue first. From enabling customers to Tip Kitchen Staff, discovering great offers, receiving personalized recommendations through Zomato AI, providing an immersive experience with Augmented Reality Menus and engaging customers with a hand cricket game during Cricket World Cup 2023, we have always prioritized innovation and customer delight. Further, features such as Menu Explorer, Multiple Carts, and visual dish galleries enhance the platform’s appeal, thereby encouraging exploration and cravings.
By providing valuable insights through Zomato Food Trends and facilitating customer win-back programs, Zomato is committed to empowering its restaurant partners to make informed decisions and improve customer interactions. Further, introducing flexible Zomato Partnership Plans has been a step toward enhancing their growth, allowing them to meet their unique requirements. Streamlining the onboarding processes and improving the quality of services offered to restaurant partners, initiatives such as the Nurture Program and POS Wellness Score have played a significant role. Through initiatives like the Owner Hub and Restaurant Awards, we are focused on empowering restaurant owners by providing valuable tools and adding more credibility by celebrating culinary excellence.
We have been witnessing a growing adoption of our Gold program, which is our biggest investment towards ensuring our customers get the best value and experience on our platform. Today, Zomato Gold contributes to over 30 per cent of Gross Order Value (GOV) in the food delivery business.
How does Zomato leverage technologies like AI to stay competitive in the industry, and what has been the users’ response?
For our valued customers, AI and ML are utilized to analyze their food preferences and behaviors, allowing us to offer personalized recommendations to help them discover options and promotions on the platform. Furthermore, we optimize the Estimated Time of Arrival (ETA) and Food Preparation Time (FPT) models using ML, ensuring faster and more efficient deliveries. Our efforts on AI and ML have significantly helped us improve customer experience over the years, and it continues to be a key focus area for us.
The recent launch of “Zomato AI – Your Foodie Buddy” is our effort to elevate user convenience and engagement by providing an AI-driven chatbot and a conversational partner to assist them in their food discovery journey. Moreover, we maintain stringent fraud detection systems with ML, securing the platform against fraudulent activities and ensuring user trust and a seamless experience.
In the first quarter results, Zomato posted GOV growth in the food delivery business driven by the number of orders and a modest uptick in average order value. What were the primary reasons for this growth and uptick? What are your expectations regarding order volume and value during the festive season?
The growth in GOV was predominantly driven by a strong surge in the number of orders, complemented by a modest uptick in the average order value. Several key factors underpinned this growth trajectory. First and foremost, it was driven by the sustained recovery in demand that commenced in February of the current fiscal year and extended into Q1FY24.
Additionally, the first quarter of the year, Q1, typically demonstrates seasonally higher performance. Moreover, the expanding adoption of our Gold program has significantly amplified the ordering frequency, now contributing more than 30 per cent of GOV within the food delivery segment.
We have observed a noteworthy recovery in demand in recent months, marking a substantial improvement compared to the relatively sluggish growth experienced over the previous quarters. This sluggish growth is evident in the modest year-on-year (YoY) GOV growth of only 14 per cent in the last quarter. However, the quarter-on-quarter (QoQ) growth of 11 per cent indicates that the YoY growth appears to have reached its bottom, giving us reason to anticipate an upswing in YoY growth in the foreseeable future.