Food delivery start up Zomato is a household name today and not just in the larger cities but also in the most obscure geographies in India. It is present in 556 Indian cities and towns across the country.
In a blog post, written by founder and CEO Deepinder Goyal presents the Zomato story – documenting the food delivery start up's journey over the last few months of expansion of its food delivery service.
Trivandrum (Kerala) was Zomato’s 50th city in November of 2018 and Leh was the 500th in July 2019. Apart from being the first to introduce large scale food delivery in northeast India, Zomato is also uninterruptedly active in 10 cities (Guwahati, Nagaon, Jorhat, Agartala, Silchar, Dibrugarh, Tezpur, Shillong, Tinsukia and Aizawl) in the region.
All these cities prove India’s growing appetite for services which add tangible values to people’s lives.
Tier 3 and 4 cities now contribute 35% of the monthly order volume. These cities are relatively small but are growing at a frenetic pace. A majority of the launches across the smaller cities reached the initial 1000-orders-a-day milestone within a few weeks, if not days.There are no delivery zones in most of these towns and Zomato delivers from any restaurant to anywhere in these towns with delivery times being 3 minutes less than the larger cities – mainly because of lack of traffic.
Out of the total delivery partner network in non-metro cities, 20% are on bicycles. This is in tune with the commitment of generating employment as well as addressing environmental concerns.
While average order value is lower in non-metro cities by 20%, the cost of delivery is lower by 50% making the economics superior as compared to the metro cities. By all measures, Zomato’s delivery business economics in non-metro cities is superior to metro cities.
Goyal also added on areas of growth for the sector saying that the smaller diameters in the non-metro cities allow for greater orders per restaurant. Meituan, a delivery app in China services 22 million orders a day from 5 million restaurants. A rough average calculation amounts to 4.4 orders per restaurant per day. In India, on the other hand, the capacity utilization is much more aggressive – Zomato delivers 1.3 million orders a day from 150,000 restaurants across India at more than 10 orders per restaurant per day.
This underlines the huge delivery opportunity of cloud kitchens and its ability to service users heavily across tight geographies in a planned manner. Goyal added that the company is committed to developing cloud kitchens across these geographies to bridge the supply gap.
Goyal concludes by saying that the food delivery business is set to grow phenomenally and estimates that about 200 million people in India will order food from Zomato about 5 times a month, with the top 20 million cohort amongst these ordering more than once a day, proving that domestic consumption in India is growing. However, India is a market is unique – companies that innovate and adapt will earn the right to serve the millions of India. The market won’t flock to any product or a service just because, he added.