According to Info Edge, Zomato’s largest investor, the online food and delivery platform intends to start deliveries on its own for a few, selected restaurants. This development comes after reports highlighting Zomato’s intention to acquire Runnr, a food delivery startup. Info Edge currently own almost 47 percent of the company.
Zomato’s reason for evaluating self-fulfilled deliveries is to catch up with its biggest competitor, Bengaluru-based Swiggy. The latter is currently leading the online order business by a huge margin.
Earlier, Zomato had stated that a self-fulfilled delivery model such as the one followed by its rival was not viable in terms of profits. In June of last year, the company revealed that about 80 percent of its deliveries were fulfilled by the restaurants themselves while the remaining were fulfilled by logistics partners like Delhivery and Grab.
The company revealed at the same time the contrast between restaurant fulfilled deliveries that gave a profit of ₹21 per order, and logistics partner deliveries that resulted in a loss of ₹9.1 per order. Based on the same, Info Edge has said that if Zomato decides to go ahead with plans to start self-fulfilling deliveries, it will do so in a carefully planned manner.
In a statement, Sanjeev Bikhchandani, the executive vice chairman of Info Edge said,
Zomato is evaluating online deliveries [that it can fulfil] on its own, but it will be done mainly for a small segment of restaurants
The online food platform will also focus on its high-margin advertising business in the current financial year along with its food ordering business which showed a substantial growth in the financial year 2017.
This focus on both aspects of the business is a result of a redesigned advertisement product in the last fiscal year. Deepak Gulati, Zomato’s newly appointed COO is expected to increase the adverising sales business in FY18. The advertising business grew a lot more than food-delivery business, increasing by 58 percent to $38 million as compared to an 8 times growth to $9 million.
Bhikchandani also said,
In FY17, the online ordering business grew faster than the advertising sales business but in FY18 the focus will be equally levied on both
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