After testing the service rigorously in the Middle East countries like Dubai, food inventory app Zomato has decided to terminate its cashless payment service for not founding it viable and profitable tu run and expand it to other countries.
Cashless payment system, launched by Zomato in February 2015 for this sting purpose in Dubai, intended to slowly diminish the need to pay through cash by allowing customers to pay through credit/debit cards. The intended objectives were to make customer check out more fluid and also to devise a new method of revenue generation because the company still works on a no profit model. However, it seems that the plan didn’t work out as it was expected to be.
As explained by Zomato CEO Deepinder Goyal, cashless payments didn’t become a part of the natural user flow as most of its users were early adopters, and the cost of educating restaurant staff to use it was too high versus the results.
Also, Zomato took a brave step of providing iPads at each restaurant in order to process payments on the merchant side, thus it found that the customer acquisition cost was too high.
As stated by Zomato CEO Deepinder Goyal on company’s blog post –
We had to lure the user to think differently –- this was the most difficult part. In our Cashless product, we needed a user to think about the payment at a restaurant before the start of the meal, whereas they are accustomed to thinking about the payment only at the end of the meal.
Zomato also announced a massive staff cut that will reduce its staff by 300 — a significant 10 percent reduction in the workforce which currently is somewhere in the neighbourhood of 3000 employees.
The move was prompted by a strategy shift that will see increased focus into revenue-generating areas like reservations. That being said, it seems like the axe will fall mostly on the US-based staffs, with Content Teams among some of the most affected. We can say that this lay off is a cost cutting strategy that will help Zomato to work better on its operations.
Zomato said that it will bring back the cashless payment service later when the market is ready and they find solutions to the said problems. Meanwhile, it will put its focus on devising new strategies and methods to make its system better and profitable.
Zomato has raised more than $223 million from investors to date and is valued at more than $1 billion.