Delivery giant Zomato, which began in 2008 and went public through an IPO in 2021, is planning a big move to expand its business.
What Is Zomato’s Big Plan?
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Zomato plans to diversify into the catering business. The company is also looking to add more offerings to its loyalty programme, Gold, despite concerns about the potential impact on profitability, Rakesh Ranjan, CEO of food delivery, said in an interview, as per an ET report.
Why Is Zomato Entering Catering Segment?
Zomato is planning to enter catering the business by leveraging its established network of restaurant partners as part of a broader strategy to service large orders.
“If I want to have a gathering of 20 people at home…right now food delivery does not lend itself well into that kind of a use case. It’s winter, I want to have a party, or I want to do a small picnic in the local park. There are tons of such use cases in the offline world. But the food delivery does not lend itself into it very well. It’s only about tying some of those loose threads…so that’s what we’re going to be focusing on,” Ranjan said.
How is Zomato expanding its business?
This year, in June, Zomato introduced the multi-cart feature, allowing users to order from multiple restaurants at the same time. This rolls up into Zomato’s broader strategy to introduce more use cases for food delivery in an effort to grow its total addressable market. Ranjan said Zomato is seeking to build “occasions” for customers to order more by initiating operational changes and through marketing campaigns.
“That’s one clear vector that we are going to be working on. We believe that occasional orderers, low frequency orderers, if they’re able to associate more occasions with Zomato and food delivery, then that’s a large base that we can address,” he said, as per the report.
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Ranjan added that “building occasions” would be at the centre of Zomato’s new initiatives going forward. The company also launched ‘Zomato Everyday’ earlier this year to target value-conscious, bottom-of-the pyramid customers.
On the other hand, Zomato is scaling down on some of its earlier initiatives that haven’t performed as per expectations. One such feature is Zomato Legends, under which the company has started intercity delivery of food. “We are constantly trying to evaluate many opportunities and have almost nil sunk cost bias. If something doesn’t work, we don’t need to stick to it for very long,” Ranjan said.
“Legends was done in a particular way. It was loved by our customers, but it wasn’t helping us scale. In fact, for a good set of customers, it wasn’t helping solve their hunger pangs because the food was getting delivered the next day. So, it had to be reengineered a little bit,” he added.
