Food technology start-up Zomato has reduced its monthly losses to Rs 1.6 crore ($2,50,000) in the current fiscal (FY18) from Rs 77 crore ($12 million) in FY17, Deepinder Goyal, founder and CEO, Zomato, told FE. Goyal added that the company is currently clocking overall revenue of Rs 36 crore per month. Of this the online food ordering business is generating revenues of Rs 11 crore per month. Zomato saw a 34% dip in its total loss for FY17 to Rs 389 crore from Rs 590 crore in the previous year, according to filings by Info Edge – the largest shareholder in the firm with 46% equity. The company’s losses shrank even as its revenue surged 81% year-on-year to Rs 333 crore from Rs 184 crore. “Our focus over the last two years has been on increasing revenue along with cutting down on wastage and inefficiencies. We have also rationalised our international operations to focus on some vital few markets. We aim to become profitable within FY18,” Goyal said.The food tech start-up, which was globally clocking 2.55 million (25.5 lakh) orders till June this year, claims to be currently clocking 3 million orders (30 lakh). Number of orders increased for its India business as well. The company which was clocking 2.1 million (21 lakh) orders in June, is currently recording 2.48 million (24.8 lakh) orders a month in the country.
Zomato’s average order value for India currently is Rs 420 and AED 65 in UAE, while the average commission earned is 8%. “We plan to continue to increase choices available to our users by on-boarding more restaurants on our platform across various price points – premium, as well as affordable,” added Goyal.
Moreover, in its effort to build consumer loyalty, the company introduced its subscription programme, ‘Treats’ under which customers get free dessert every time they place an order about a month and a half earlier. While customers in India can subscribe ‘Treats’ for Rs 299 per year, in UAE, the subscription is available at AED 39 for six months. Zomato claims to already have 10,000 paid subscribers, across India and UAE. According to the start-up, it is currently processing 28,000 orders a day. Unlike its competitors in the business Swiggy, Zomato does not run its own delivery fleet. Instead majority orders are delivered by restaurants, while it uses third party delivery service in select areas. According to Goyal, 93% of its orders are currently fulfilled by restaurants and only about 7% of the order fulfillment is facilitated by Zomato through third party logistics (3PL) companies.“So far, third party deliveries have not been able to hit positive unit economics because of low utilisation rates of riders and low average order values. Hence our choice of limited usage of third party delivery companies has resulted in overall lower cost of delivery as compared to the option of self-fulfilled deliveries,” said Goyal.
Even as order numbers continue to increase for Zomato, the company’s advertising business still generates majority of its revenue. “Our ads business is our bread and butter. Food delivery is a new business, which is growing faster than the ads business. While we expect the ads business to be the mainstay of our business, food delivery is increasingly becoming more relevant to our revenue,” added Goyal.