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Zomato: Can it win the Battle for Leadership in India’s Food Tech Market?



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Code : COM0268

Year :
2019

Industry :Food Aggregators

Region : India

Teaching Note: Available

Structured Assignment : Not Available

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FOOD SERVICE INDUSTRY IN INDIA PRIOR TO THE EMERGENCE OF THE ONLINE DELIVERY BUSINESS:

Due to its growing working population, government policies and growth of the service sector, India with a GDP of US$ 2,689 billion in 2018 was expected to grow to US $ 3,586 billion by 2021. Food and Beverage (F&B) service industry had played an important role in the growth of Indian economy. It witnessed a rapid growth since 2014. This growth had attributed change in the pattern of food consumption owing to higher disposable income and changes in eating habits of people. As per Nasdaq, India was the only trillion-dollar economy that was among the five fastest growing economies in the world in 2017. Strong macroeconomic fundamentals, robust domestic demand, favorable demographics, and government policies were expected to contribute to a growth of 7.73% during 2017 -19.

 

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EVOLUTION OF ONLINE FOOD DELIVERY INDUSTRY IN INDIA:

Prior to the entry of online food delivery firms in India, customers wanted to enjoy eating food with family and friends, had difficulty into searching good restaurants at vicinity while struggling with their appetite for dining going down. They went all the way around the city they lived and waited for their turn to get a seat to eat food. Also they faced traffic congestions on the road which discouraged them from eating out. But things changed drastically when they could enjoy the food at their leisure by getting their food ordered at their door steps. Due to the extended working hours at the office with heavy work pressure, people started looking for ordering healthy food to the place wherever they were after the availability of online food delivery in 2013...

ENTRY AND GROWTH OF ZOMATO:

India’s online restaurant discovery and food delivery company, which was originally launched as ‘Foodiebay’ in 2008 was renamed as Zomato in the year 2010 to avoid confusion with ‘ebay’. It started as an internet directory for restaurant search and discovery and online food ordering. It provided listing all the restaurants and the menus on the web. Initially having started with Delhi-NCR region, as their services gained momentum, it expanded across the country...

OTHER PLAYERS IN THE ONLINE FOOD DELIVERY MARKET:

In the year October 2014, the duo, Nandan Reddy (Nandan) and Sriharsha Majety (Majety), who were alumni of Birla Institute of Technology (BITS) Pilani, with an intention of targeting the hyper local delivery business, started Swiggy in Koramamngala, Bengaluru, Karnataka, India. They brought in Rahul Janimin who was an alumnus of IIT Kharagpur...

MARKET SHARE AND INTENSITY OF COMPETITION:

Zomato, Swiggy and Foodpanda were well established in Indian market by 2017 while Uber Eats was a new entrant in that year. The relationship between restaurants and Food Tech companies like Zomato, Swiggy, Uber Eats and Foodpanda varied greatly...

THE ROAD AHEAD: Though Zomato claimed the Unicorn status in March 2018, the immediate rival Swiggy became the 2nd Food Tech company to get Unicorn status by being valued over US$1 billion. With funds pumped in by investors varying from US$ 800 million to US$1 Billion by 2019, the challenge for Zomato was to enhance the market share and become profitable...

EXHIBITS

Exhibit-I: Real GDP growth (Annual Percent Change)
Exhibit-II: Top Ten Countries with the Highest Population
Exhibit-III: Online Food Delivery Market Size
Exhibit-IV: Funding Rounds for Zomato
Exhibit-V: Revenue Growth of Zomato - 2017 Vs 2018
Exhibit-VI: Zomato Piggybank
Exhibit-VII: Zomato Coupon Code, Promo Codes & Deals on 11.03.2019
Exhibit-VIII: Uber Eats Promo Codes & Coupons
Exhibit-IX: Ranking of Online Food Tech during the 4th Quarter of 2018





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