The food delivery business of Zomato has largely been topsy-turvy since it decided to expand beyond restaurant aggregation. But the company recently revealed that they managed to cross a million orders in the month of July alone. It also witnessed an increase in average order value and the contribution margin.
In a blog post, Zomato announced this feat and wrote,
Finally, at 8:23 pm on the 31st of July, we hit the million order mark for July and then we racked up another 20,000 orders before the night ended.
Notably, Zomato is still behind Swiggy in terms of the number of orders fulfilled but has managed to close down the gap significantly. Zomato also has a minimum number of orders clause for restaurants on its platform which is another reason behind its second position.
However, that has also led an increase in its average order value. The average order value at Zomato is Rs. 480 whereas Swiggy has pegged this value at around Rs. 340.
Moreover, Zomato also revealed that they have been able to improve their unit economics by 10% as compared to 2 months ago. Now, it makes Rs 23 per order as contribution margin compared to Rs 21 in April.
Ups and Downs for Zomato this year
Zomato has seen its fair share of ups and downs this year. Earlier this year, it had to shut down its food ordering business in four cities. Later it pulled out physical presence from nine countries including the US and the UK to cut costs. And then it witnessed a staggering 262% increase in losses from Rs. 136 crore last year to Rs. 492.3 crore in the present one.
It also came under the scrutiny of HSBC investors who claimed that Zomato was no longer a unicorn. However, the company denied these reports with CEO Deepinder Goyal assuring his employees that nobody had marked down their valuations.
In fact, earlier the company had revealed that it already turned profitable in six out of its 23 markets. Most importantly, these 6 markets also included India which is said to be the toughest market for any internet based business (Ask Flipkart, Ola, and many others!), let alone online food business.
Last year, it has also announced an investment of 40 million in its food ordering business. It also partnered with Snapdeal to let Snapdeal users order food from Zomato from within the Snapdeal app.