Zomato: An Indian Startup acquiring the world

Zomato initially named as Foodiebay was started by Mr. Deepinder Goyal. It is a restaurant searching platform providing in-depth details with autonomous reviews and ratings. Foodiebay, the initial name was changed to Zomato in November 2010 to increase their reach among people.

Zomato is a restaurant discovery platform providing comprehensive menus, reviews and contact

details for restaurants in 21 cities across the world. Territories include India, USA, United Arab

Emirates, Sri Lanka, Qatar, the Philippines, South Africa and now London. Founded in New

Delhi in 2008, Zomato employs approximately 1000 staff over the globe.

To differentiate themselves from their competitors, Zomato concentrated on adding approx. 18,000 new places to eat from. Along with they also decorated many special features, such as pointed to particular dishes or opening times”.

To be the largest resource in food supply market, Zomato bought urbanspoon, a leading restaurant service providing portal for $52 million to enter US, Canada and Australia to leverage local insights and experience and to expand their business in overseas seeing the future goal and objective.

Vision

To expand in more than 50 countries

Milestone

Number of listed restaurants: in 2008 it was 4000 restaurants which increase to 94000 in 2013 and currently 384,100 in Q1 of 2015.

Monthly visitors of Zomato increases to 35 million in 2014 which was 11 million in 2013 and 0.015 million in 2008.

Yearly revenue of Zomato in 2008 was 0.06 crores which increased to 11.3 crores in 2013.

Spread in 21 countries worldwide.

Success Factor:

First mover advantage

Strong content platform

Efficient employees

Good rating mechanism and social platform

Funding from experienced source

Strategy of Zomato:

Zomato works with keen interest on various strategies to achieve their goal. It includes

Financial strategy: To increase their fund and revenue

Marketing strategy: To tap their customers from across the globe

Growth strategy: To grow continuously and increase their customers and page traffic

Globalization strategy: To expand themselves across the whole globe as a leading service provider

Marketing Strategy

Featured and user friendly website

Global mobile app

Focusing on digital marketing channels for potential customers

Acquire the competitors: To be the largest resource in food supply market, Zomato bought

urbanspoon for $52 million to enter US, Canada and Australia

Sales promotion: Coupons and price-offs

Direct Marketing: Phone call and direct mail

In August 2010, Zomato got its first round of funding of $1million from Info Edge, India. And in September 2011, got its second round of funding of $3.5million from the same financier. Next year Zomato upraised its third round of another $2.5 million from the same investor and again in early 2013, Info Edge funded fourth round worth $10 million which gives them a 57.9% stake in Zomato.

Seeing the future and growth of Zomato, Sequoia Capital and Info Edge, India in November 2013 funded Zomato with $37 million. Info Edge now owned 50.1% of Zomato on an investment of INR 143 crores. The total funding raised by Zomato till November 2013 stands at $53.5 million.

In November 2014, Zomato came up with a fresh round of funding of $60 million at a post-money valuation of ~US$660 million. This round of funding was jointly headed by Info Edge India Limited and VY Capital, with involvement from Sequoia Capital. This made a total funding of over US$113 million for Zomato.

Recently in a fresh round of funding in April 2015, Info Edge, India has invested an amount of Rs 155 crore in Zomato.

Info Edge said in a statement “Being Info Edge’s fair share of Zomato’s recent fund raises of USD 50 million”. Upon completion of the allotment of shares, Info Edge’s aggregate investment in Zomato will be about Rs 484 crore.

As the website was launched, it became popular soon and expanded rapidly, covering many important regions of India including Kolkata, Mumbai, Bengaluru and Pune by the year 2010. Apart from being a service provider within India, Zomato.com now has branched to overseas in

the regions of Philippines, New Zealand, Qatar, South Africa, Sri Lanka, the United Arab Emirates and the UK as well.

The website covers a list of over 1, 20,000 restaurants across all these regions catering to more than 15 million customers worldwide. With its headquarter in New Delhi, Zomato.com is

providing career opportunity to over 350 employees all across the globe.

Social media Strategy

Zomato uses different platforms to engage their customers with them.

Facebook

There is a huge engagement of customers on Facebook. Zomato has more than 600k strong Facebook community.

Twitter

Twitter is a place where Zomato is sparkling. It has more than 114 k followers there. Used as a conversation platform with the customers, Zomato is doing a great job in engaging their customers on their page. They answers all the queries raised over the platform by the customers.

Blog

Sharing and updating with all the latest updates is a key point for any organization. Zomato uses their blog as their mouthpiece to share all the latest updates.

Pinterest

The platform shares the food experience with great content to attract their customers. The company needs to do a lot of job to make its followers on this platform which will certainly work in their promotion.

Instagram

This platform lets the user share the foodie photographs just by sharing it using the tag # Zomato. The image automatically gets shared on the microsite.

Success Story

The key factor for Zomato success is its marketing strategy and in-depth knowledge of their competitors. Zomato aims to be a place where the foodies hangout. The company has spread in 20 countries with its headquarter in New Delhi, India providing service to over 35 million values customers per month. The list of registered restaurants on the website has increased to 384,100 till March 2015.

Facebook, Twitter and Pinterest are the 3 main platforms which made the base for the success of Zomato with a deep presence among their customers. Other than that, Zomato has extensively invested a lot over SMO’s, SEO’s and has worked a lot to improve its UI and make it more user interactive. Side by side with a goal to branch globally, they also invest much on TV ads to bombinate Zomato.

Pankaj Chaddah, the co-founder of Zomato agreed, “ads on the mobile app have changed the revenue game for them”. More than 50% of their total traffic comes from their mobile apps. “Using location-based services to target ads around a consumer’s physical location helps make this decision easier” said Chaddah.

Sanjeev Bikchandani, co-founder of Info Edge and Zomato’s largest shareholder said, “the firm will focus on segments such as online food ordering, restaurant booking, subscription-based services and billing inside of restaurants”.

It all started in an office cafeteria five years ago in Delhi, India. Zomato's founders used

to sit with their colleagues and stare at the same five menus from restaurants near their

workplace. Bored with the limited choice, they started collecting restaurant menus and

placed them on a website. Four years and fourteen cities later, Zomato was ready to

spice up the UK food market.

The India-based restaurant discovery service set up in London with help

from London & Partners.

Business aim

As part of its global expansion plans, Zomato saw an opportunity to enter and dominate London's restaurant review and bookings market. But the company needed a trusted partner to help it understand the sector, establish an office and recruit the right staff.

London & Partners services

Finding an office: introductions to serviced office providers; guidance on office space in Tech

City Recruiting staff: advice on salaries, recruitment and work placements

Market intelligence: providing information on London restaurant, hotel and venue listings

Professional services: advising on accountants and legal firms

Business success in London

Zomato set up its sales team in London in November 2012 and launched its website just three months later in January 2013. By April 2013 the London operation had 16,900 restaurants on its books and employed nine people. It is on track to employ 25-30 people within three years.

In their own words

What advice would you give a company trying to expand to London? “Take advantage of the resources that the Government provides. London & Partners and UKTI have been brilliant. And take advice from London & Partners about who you should be talking to. The teams at London & Partners have very deep knowledge of the industry. We were able to verify what we were doing by talking to them.” What difference did London & Partners make?

“We wanted to be ‘in market’ a few months before the summer. If we hadn’t had their support we wouldn’t have launched before June 2013. Regarding choosing London over other cities, I think we would have still considered London but it would have moved down the priority list.” What is Zomato?

“We are a restaurant discovery platform providing in-depth information including independent reviews and ratings. It’s a one-stop shop for diners and offers a way for restaurants to differentiate themselves. We are funded by advertising and do not take a cut of bookings. It’s proved to be a big success world-wide.” London & Partners can introduce companies like yours to hundreds of vetted professionals. Who did they introduce to you? “They connected us to the right people. They put us in touch with office spaces and lawyers. They also sent recruitment companies our way so we could also find talent very quickly.” Why expand to London? “London hit the sweet spot for us. It’s a very significant market but there’s no dominant player. We are confident that we can become that dominant player. London has a lot of websites where you can book a meal online but 85% of bookings are still done on the phone. We aim to change that.” The UK capital offers a springboard to global growth. Where next? “We already have 16,900 London restaurants on our site. We had hoped to break even within 12-18 months but I’m confident that we should break even in London within six months. We will develop the London market first and move to the European market from there.” London offers one of the largest concentrations of ICT expertise in the world. Have you exploited this?

“London has a very big talent pool. I don’t think we would have been able to ramp up in the same way in our home market. We don't rely on users to post reviews; we are an independent platform so hired interns from the London School of Economics to visit and review each restaurant.”

Londoners are among the most technologically sophisticated consumers in the world. Was this a factor? “Yes. The customer here is very educated. They appreciate that we offer an independent content platform and they are accustomed to being online. London is a huge market.” London & Partners is expert at helping overseas companies like yours set up in London. What did you think of the service generally?

“They helped us get all the practicalities out of the way so we could get on with the business. It seems like easy stuff but when you are entering a new market as a foreign company these are huge challenges. They got our office up and running in 24 hours. London is one of the easiest places in Europe in which to set up a new company. What do you think?

“In terms of regulation, London is a walk in the park. Coming to London was so much easier compared to other cities. We had a lot of support from London & Partners. Payroll…bank accounts…what normally takes three months took one week.”

Zomato UK CEO Pramod Rao explains: “For four years India was our main focus. For

the next phase we realised there were other markets where our product would fit in and

there was a need for it as well. So we started expanding in September 2012 last year.

We looked at English speaking countries or places with similar demographics to India."

Although the UK market looked tasty, Zomato ran into lots of competition. It needed to

stand out. “With our campaign, we wanted to bring out the key aspects that

differentiated us from the rest of the market. Our model is completely different from our

competitors as we rely on ourselves when it comes to content such as listings

information,” he says.

Before every launch, Zomato collects data. The team visits restaurants, takes pictures

and uploads the menus. “We can then socially build on that with people adding their

own reviews. No other player has such a comprehensive database. So we try to build a

social community around food,” Rao says.

The business model clearly stood out from the crowd, but what problem was Zomato

trying to solve? “From a user point of view, our product could come across as just

another website that has come onto the market. So we wanted to make the discovery

aspect crystal clear. With our campaign, we focused on discovering 18,000 new places

to eat. But we also highlighted special features, such as searching for particular dishes

or opening times,” he adds.

The Strategy

Rao pinned down three major factors that would make the campaign a success: in-

house PR, community engagement and the right timing.

Zomato believed its staff could talk most passionately about the brand. This is why Rao

kept the PR in house. He explains: “We wanted to do our marketing efforts internally

because we personally wanted to build relationships with the media over time. If you

change from one agency to another, you lose that contact. It’s about taking a friendly

approach when it comes to PR. It was definitely cheaper to do it ourselves as well.”

Simultaneously, Zomato built a social media community. It reached out to bloggers

every week, collecting valuable feedback and improving the product. As most of the

marketing was done in house, it was also important to get a taste for the media’s

opinion.

Six months in, Zomato had been cooking up ideas with the online community side-by-

side. At this point, half a million users were coming onto its website every month.

Zomato’s recipe was going to plan. Now it was time to launch its campaign to increase

brand visibility.

“We had a good momentum going, so all we needed was that push to make the next

stage a success. We felt the timing was right. The feedback had been integrated, our

product was very good and we had a strong user base. We wanted to take it to the next

level, which meant more people should know about Zomato,” Rao says.

In order to reach the greatest number of hungry commuters, timing was very important.

Rao explains: “We could have run the campaign in July, but many people would have

been on holiday so we decided to wait until September.”

Zomato’s campaign resembled a tightly run kitchen, with Rao as its head chef, knowing

exactly what results he’d like to see served up. “We wanted a three-fold increase in

website traffic, but we also focused on mobile apps. We weren’t looking at a three-fold

increase, but were hoping to have the amount of downloads doubled.”

The Execution

The next step was to take a closer look at its users. “We noticed that in London at least

95 per cent of our users take the Tube at some point. So we considered that would be

the best way to reach out to them. We also saw that 70 per cent of our users are young

professionals who work for corporations. When looking where to advertise, we selected

the City and Canary Wharf because they were Zomato’s most popular subzones,” Rao

explains.

The £500,000 campaign also enticed people by advertising its tasty wares through other

mediums. “From the total budget, a significant amount went on Tube advertising. But we

also decided to advertise in print. So we ran ads with The Evening Standard, City AM,

The Wharf and outer-London trade publications,” he says.

For the company’s online campaign, Zomato used a display ad platform and

behavioural targeting to get its message out. “From the categories that we selected, we

focused primarily on food blogs and online communities. We also targeted people

whose online behaviour showed an interest in food and e-commerce websites. While

food websites ensured relevance, the e-commerce sites were added so that we could

target people who have a certain disposable income and can afford eating out.”

But the heat almost got too much in the kitchen, as the team struggled to decide on its

main message. “Our initial USP was that we had lots of rich content. But we also liked

the simple message explaining how we started. Up until the deadline we had several

messages in place. In the end, we decided to forget about everything and go back to

basics,” Rao says.

To get Zomato’s ravenous followers to share the company’s content, a friendly tone was

considered the best way forward. “Our social media strategy never involved too much

talking about the product itself. The posts on social media, especially on Facebook, are

more about showing our humorous side. People prefer to share that content. Our main

intent was for people to link Zomato with restaurants and food.”

The Outcome

The campaign ran for two and a half weeks, leading to some tasty results. “We saw a

five-fold increase in the number of reviews that were submitted; 70 per cent of those

came through the mobile apps. The numbers were significantly higher than in India,

where we saw a two-fold increase in reviews after our campaign,” Rao says.

The mobile apps proved particularly popular. “The apps were being downloaded much

more, which pushed up the rankings and the amount of people interacting. From a user

point of view, that was the biggest indication that outdoor advertising impacted user

interaction. When you’re in the Tube you don’t have connectivity, so to see such an

increase is great.”

After the campaign, the apps shot through the ranks. The Zomato iOS app is now

placed at number eight in the food and drink category, having jumped from slot 84 in

under two weeks. The company’s web traffic has also increased from 5 per cent to 10

per cent week-on-week. When looking at the complete 10-month period, Zomato has

gone from zero to 20,000 restaurant listings, 700 to over 700,000 unique monthly visits

and from zero to 12,000 restaurant reviews.

Big food brands have also become more receptive to Zomato’s services. “The bigger

brands are getting to know about Zomato, which is a good sign. Many have been e-

mailing us, asking to update their listings or for a meeting to discuss what more can be

done on Zomato,” he says

The Analysis

Looking back, Rao would have liked to get more for his money. “This campaign was

only focused on brand visibility. But ideally I would have also done a campaign with a

call for action. In some time we will start to think about doing that.”

The challenge Zomato now faces is to maintain the impression it has made. “The main

objective of brand visibility we’ve achieved. Now the campaign is over, the challenge

lies in sustaining our impact. So we’re refocusing the campaign to make sure that

happens. We’ve visited restaurants and put over 2,000 stickers up to ensure that the

campaign is prolonged over time,” Rao says.

For Zomato’s next campaign, the company will be going back to the whiteboard to

explore what zero-cost marketing efforts it can use. “It’s about PR, putting stickers up in

restaurants and getting more bloggers on board. We’re also looking at further

expanding within the UK. So for 2014, our budget will be invested in city expansion,

improving content and doing events related to food.” So expect more results to be

served up, coming to a city near you.

In News

Zomato Media Pvt. Ltd, which owns the eponymous restaurant search portal and app,

said on Monday that it has had acquired Seattle-based bar and restaurant guide

Urbanspoon in a move that gives the Gurgaon-based company a toehold in the

competitive US market.

The company did not disclose the size of the all-cash deal.

For Zomato, founded in 2008, the US acquisition—estimated at between $50 million

and $60 million according to a person with direct knowledge of the matter—marks its

most ambitious move.

It puts the company in direct competition with Yelp Inc. and other similar restaurant

search and review apps.

Zomato plans to invest $50 million in the US to stay in the game and expects to

overtake Yelp within 12 months.

“Usually it takes us 12 months to penetrate a market and be the market leader; however

in this case we would like that to happen sooner,” said Pankaj Chaddah, co-founder of

Zomato.

Zomato, which has thus far raised $113 million, said it will raise more in the next three

to six months.

“Our biggest differentiator will be content. We have much better and relevant content

and we will continue to follow the model of collecting and publishing the content

ourselves rather than crowd-sourcing it,” said Chaddah.

Yelp crowd-sources menus, contact details, and pictures.

Urbanspoon, one of the largest restaurant guides in the US, is Zomato’s sixth

acquisition in the last six months. In December, Zomato acquired Italy’s Cibando for an

undisclosed amount.

The deal also establishes Zomato’s presence in Australia and Canada and enhances its

position in the UK and New Zealand, countries where Urbanspoon has a presence.

It helps Zomato expand its presence to 500-plus cities in 22 countries and increases its

restaurant coverage from about 300,000 to more than one million.

According to Zomato, its traffic will more than double—from nearly 35 million visits per

month to more than 80 million visits per month—as a result of the acquisition, making it

the largest restaurant search company in the world.

“Our US entry has been on the cards for a while now, and we’re delighted to be doing

so by welcoming Urbanspoon into Zomato. It has a strong presence in the US and the

UK, and also dominates restaurant search in Australia and Canada,” said Deepinder

Goyal, co-founder and chief executive (CEO) of Zomato, in a statement.

The US will not be an easy market to crack, said Sandeep Ladda, technology leader at

PricewaterhouseCoopers India. However, given the core advantages and competencies

that Zomato has built, the acquisition puts Zomato in a “win-win situation”, Ladda said.

An integrated entity (Urbanspoon with Zomato) will be an additional layer of competition

for Yelp, he said.

Zomato will soon integrate the two products and Urbanspoon’s traffic will move to

Zomato.com. Launched in 2006, Urbanspoon was founded byAdam Doppelt and was

sold to Internet conglomerate IAC in 2009. It currently has 50 employees in the US.

According to Zomato, the entire Urbanspoon team will join Zomato and the integration

will take place over the next three months.

“Zomato has experienced phenomenal growth in recent years, and our customer bases

complement each other’s perfectly,” Urbanspoon’s CEOKeela Robison said in a

statement.

In December, Mint reported that Zomato was looking to expand its international

presence by entering 15 more countries including the US in 2015.

Founded in 2008 by Goyal and Chaddah, Zomato has received investor backing

from Info Edge (India) Ltd, Vy Capital and Sequoia Capital. Info Edge currently owns

over 50% in Zomato.

Zomato is currently valued at $660 million.

Zomato’s larger vision is to be a one-stop shop for everything from restaurant discovery

to restaurant payments, Chaddah said in an interview in December. The company will

soon be introducing a payment option in the app in some markets, including Dubai.

However, it will take some time to implement this in India.

For the year ended 31st March 2014, Zomato posted a loss of Rs.37.2 crore on revenue

of Rs.36.11 crore. For the previous year, the company posted a loss of Rs.10 crore on

revenue of Rs.12.30 crore.

Blog

http://blog.zomato.com/

References

http://www.letsintern.com/blog/zomato/

http://www.socialsamosa.com/2012/07/zomatos-social-media-strategy-explained-

interview/

http://www.digitalvidya.com/blog/top-7-content-marketing-case-studies/

http://www.livemint.com/Consumer/LKn4cGrmrQwLdrirZvixnK/Zomato-enters-US-with-

Urbanspoon-acquisition.html

http://www.slideshare.net/manoharguptha1/from-zero-to-zomato-in-five-years

http://dsim.in/blog/zomato-an-indian-startup-acquiring-the-world/

http://invest.london/about-us/case-studies/zomato-case-study