This is the third and the last in the series of articles that I wrote on food Tech with a focus on critical success factors for the business, will keep it short as I pick Zomato and see its food ordering piece from an outsider’s perspective both as a user and from business standpoint.
So what are clichéd the 4 P’s of marketing? Remember its Product Place Promotion Price how do they apply to the App economy? Well it’s just that it’s a different context in case of zomato there is a storyline, so just stay with me.
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| A perfect day at Mcloedganj |
The two stakeholders
Consumer:
So what’s the persona of an ideal zomato (media business) consumer? He/she is a food lover, likes to explore new F&B joints between 18-35(upper limit) years old, the profile varies from a student to a corporate employee, He /she is extremely social goes out to eat 3-4 times a month, to whom peer review is important and engages with zomato and provides feedback to community about his /her experiences and expects superior and responsive service ,Willing to pay more for better quality
Zomato explicitly claims it has an unfair advantage when it comes to traffic, lower consumer acquisition cost, that is correct but what exactly are customers doing on zomato? They are essentially browsing and if zomato claims an average order volume of 15K-18K orders a day , the numbers are off , you can’t turn a consumer persona of a browser to a purchaser in short term , so you need access to more transacting consumers quickly , will discuss how zomato is going about it in “ place” .
Rating to users on zomato are integral to how they make decisions and its core to zomato media platform so users want to eat at good places which are rated, so I ran a little statistics check to see and feel the aggregated ratings, realizing that it's skewed and so is the number ratings/ restaurant, so what about the poorly rated restaurants are they really that bad or do they thrive on providing economical food ordering options and for them these ratings don’t count.
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| Yummy Cheesy Egg Sandwich |
Merchant:
So ratings, which is the basis of zomato’s existence played a role, and they incorporated a differential pricing as a function of ratings, it backfired and zomato started a new rating for delivery experience and incorporated in Zomato Order, so for a few months you could see two rating one was overall rating and one delivery experience and lately zomato has done away with the overall rating for delivery business in favor of delivery experience rating.
Zomato does have a media and advertising business for its platform and for attribution it gives IVR phone numbers on its platform and charges merchants per lead basis , it has a coin-based system where the coins deplete as a function of time of call and merchant is given full access to data .
So zomato knows who and what sells, which merchant are popular etc. and gives confidence that it can convert some and if not all of these users to start ordering from App rather than phone. In a way cannibalizing its media business (well they have structured them differently and they are operated differently) but it gets bigger cut via commission it has started reflecting in all zomato’s communication rem Call Ho Na Ho Add front page in all national daily’s.
Will skip the product, price, promotion you can play around with the app and see how seamless it is but I am particularly fond of the chat element of the App and I must admit I have pushed zomato to the limit by throwing tantrums and zomato never disappointed and I had to submit to zomato’s devotion to user experience and pulling all stops to make users happy. So if you see the elasticity of demand ( yeah you are right Microeconomics 101 , zomato users would have high average spend and less prone to price and discounts.
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| Made me crave for a bite :) |
Place
So this is where it gets really interesting and happens to be one of my favorite parts, so zomato first started out and didn’t want to mix media business with the food ordering and quite rightly, I mean the fundamentals of both businesses are very different, but to launch another standalone app and driving users to download it proved difficult and CAC started rising and quickly it realized the mistake and developed a zomato SDK and incorporated it into the media app. Now once you have the SDK basically anyone can now be a distributor/ affiliate much like the web affiliate and sell food from the zomato the aggregator , it quickly formed alliance with snap deal its first , it might have seemed random at first but if you consider that the profile of customers on snap deal was transactional in nature it made sense and the revenue is incremental and since it struggled to gain traction in 2 tier cities where snap deal already have users it might leverage that and restart operations in them, it then formed multiple alliances and worked a deal with jugnoo , Helpchat It recently provided plugin for Microsoft outlook , soon for slack , FB messenger and Siri , working with the startups in real estate space providing their consumers with seamless experience in one app. This works well because if the average shelf life of an app on user’s smart phone ranges from a week to 3 months, you need to increase the probability of being available for the user. U just can’t depend on upon your own store front a.k.a your App but much like retail and web traffic affiliate and alternate channel play an important role.
