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Demonetization: Zomato sees 200 pc online growth; to roll out new initiatives


Zomato, the online restaurant aggregator and food delivery platform, has experienced 200 per cent growth in its online business post note ban. The company has seen no impact on its order volume, in fact the orders placed on its platform since the Government’s move, have risen.

“Post demonetization, 100 per cent orders on Zomato have been paid online and our order volumes have significantly increased. We had turned off the COD option post the announcement across all platforms – this was to ensure a smoother experience for our partners as well as users. We have since seen a huge spike in our online order volumes, with a 200 per cent increase in online payments, and the order business as a whole continues to grow at a healthy 20 per cent month-on-month basis,” a spokesperson at Zomato told Indiaretailing.

Zomato has been supporting usage of debit and credit cards, netbanking, and wallets from Paytm, Mobikwik, Freecharge, and PayU money, even before the announcement of currency ban.

Post Modi Government’s decision to ban Rs 500 and Rs 1,000 currency notes, Zomato has been taking various other steps to encourage online payment.

“Over 80 per cent of our restaurants have already started accepting online payments and our teams have been working closely with the remaining 20 per cent restaurant partners to enable online payments at those restaurants as well,” revealed the spokesperson.

Apart from this, Zomato is also running new campaigns and is actively working with banking and online wallet partners to educate the users.

But as the restaurant aggregator has been closely monitoring the cash flow situation and can forsee initial signs of liquidity coming back into the market, it will soon be running a pilot COD option as it.

According to the Zomato spokesperson, “We will soon run a pilot switching on the COD option for a few restaurant partners within some cities – to test how this impacts our user experience, as well as understand the kind of challenges it might create for our restaurant partners.”

New Initiatives

In early 2015, Zomato started online ordering business, making it extremely easy for people to order food online with just a few taps on their smartphones. The company has observed that that there has been a growing demand for getting food delivered at home and believes it is going to grow even further.

Considering the growth of this model, the company is planning to setup delivery-only aka cloud kitchen, where it can drive significant business by just focusing on deliveries. The new service will be known as Zomato Infrastructure Services.

“We want to grow this ecosystem even further and encourage more entrepreneurs to start their kitchens or expand their business. While setting up a delivery-only restaurant is easier than a full-service restaurant, it still requires considerable capital and a long drawn process that includes finding a location, finalising the lease, renovating the place, setting up the infrastructure i.e. HVAC system, gas bank, sewage treatment plant etc, and then ordering the equipment. Considering this provides a high barrier to entry, not many brands / entrepreneurs can expand / set up a business by just focusing on what they do best, which is food,” revealed the spokesperson.

Under Zomato Infrastructure Services, the company will create kitchen spaces in areas where there is not adequate supply of good restaurants and will allow restaurants and iconic brands to prepare and deliver food exclusively for Zomato through these kitchens.

“We will invest in the infrastructure right from kitchen to last mile delivery and work with restaurant owners on a commission-based model. The initiative will initially be tested in Gurugram,” the spokesperson added.

Zomato also takes care of all services including the online ordering platform, point of sale system, call centre, and logistics. Restaurants can now focus on only making delicious food and leave the rest to the Zomato.

According to the spokesperson, “There is enough scope for innovation that can be driven through this. Once we start getting multiple restaurants at the same place, we can allow users to order from multiple restaurants, without increasing the logistics costs. Riders can take multiple orders in one go without compromising on user service.”

Zomato will also be rolling out an exclusive subscription based program called Zomato Red. It will be first rolled out in Dubai and Lisbon (Portugal) starting January, and will be introduced in India by March 2017.

Explaining the concept of Zomato Red, the spokesperson said, “It is an annual/bi-annual subscription that gets subscribers special privileges like happy hours for drinks at various pubs and restaurants through the day.”

Future Plans

The Gurugram-based company is also looking forward to raise a new round of funding. Zomato has roped in global investment bank Morgan Stanley to raise the new financing round, confirmed the spokesperson without divulging into further details.

However, according to the sources, the funding is expected to be larger than its previous US$60 million the company raised in September 2015 as it takes on Bengaluru-based rival Swiggy in the food delivery business.

The company is planning to use half of the capital raised for delivery business, while the rest will be used to expand new businesses such as table reservations and special deals by restaurants.

Source: India Retailing

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