Research Study on 'Risks in Food Tech (Zomato)'

By Rajat Sharma and Sanandita Mukherjee, PGDRM Batch July’20-21

Brief about the company

Zomato was co-founded by Deepinder Goyal and Pankaj Chaddah in 2008, as a restaurant search and discovery service, but later extended to include table reservations, online ordering, point of sale (POS) systems, and cashless payments. In 2011, the company introduced its digital app, and later on, in March 2018, Zomato became a ‘unicorn’ with a valuation of $1.3 billion. It has its presence in 24 countries and more than 10,000 cities. It operates in over 100 cities in India, up from 15 cities in 2018, and serves more than 70 million users monthly. In the FY2020, Zomato’s revenues increased to $394 million.

Business Model

Revenue Model

Porter’s Five Forces

Threat of New Entrant: Low to high

New threats – Amazon expanding to food delivery.

Strategy:

As the threat of new entrants is low to high for Zomato, they can opt for the expansion strategy for increasing the market share by penetrating deeper into Indian markets. Many tiers 3, 4, and 5 cities are yet to be covered. The plan needs to increase partnering with maximum food restaurants and cafes.

E.g, Amazon with Amazon pay, User database, Brand name, Rider network, Money, Technology, and Collaboration between Dunzo and Biryani Blues

Threat of Substitution: High

All of the food delivery apps are available on the same platform for the user, which makes a very high threat of substitution. As the numbers of options are available in parallel, the user can shift from one app to another app easily.

Strategy:

Designing a product or service with unique features.
Building Emotional Connect with customers.

E.g, Restaurants delivering food directly to customers, Apps like Foodpanda, Cloud Kitchens

Bargaining Power of Customer: Medium

The level of substitution threat Zomato is more due to the availability of similar products. Similarly, it leads to an increase in the bargaining power of the customer. To capture more customer base organizations often give more and more offers to customers. But most of the time it happens that those customers leave once the offer gets over.

Strategy:

Zomato needs to continuously work on acquiring more and more customers.
An increase in customers reduces the bargaining power of customers.

Read the full research study here: Risk in foodtech(Zomato) by Rajat Sharma and Sanandita Mukherjee

Disclaimer
This report has been produced by students of Global Risk Management Institute for their own research, classroom discussions and general information purposes only. While care has been taken in gathering the data and preparing the report, the student’s or GRMI does not make any representations or warranties as to its accuracy or completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied. References to the information collected have been given where necessary.
GRMI or its students accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained in this report. This report does not constitute advice of any kind.