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Zomato is an Indian-multinational food delivering company and a restaurant aggregator(think of it as a real estate owner in a digital restaurant space). Zomato was founded in 2008 by Deepinder Goyal and Pankaj Chaddha, now operating in 10 countries.

Problems @ Zomato (2018-2020)

Revenue increased from $65 million to $368 million, roughly 450%, amazing growth right. What one fails to notice is that losses increased from $15 million to $300 million, a whopping 1900%.

This happened due to two reasons 

1. The massive failure of Zomato Gold, membership-based services like amazon prime but the restaurants started incurring massive losses due to heavy discounts and so they started the #Logout campaign, which hit zomato so hard that they had to close the offering.
2. An increase in prices of the dishes to combat the losses made customers unhappy and resulted in the #boycottzomato campaign.

Reference to Amazon which will make you understand

Flashback to 2013, a silicon-based company name JUNE, launched its smart oven, which operated via touch panel, had inbuilt recipes, could be operated using wifi and also was ALEXA compatible at a price point of 700$, and they were so technologically advanced in 2013. They listed their product on Amazon and were an instant best-seller, but that was their biggest mistake.

How Amazon eats its competition 

Let's explain it in simple and easy to understand points :

1. Find the best-selling product on Amazon.
2. Use data from the seller's profile and get exact specifications.
3. Read reviews & find out the most appealing attributes of the product.
4. Buy or build a manufacturing unit and make exact replica of the product.
5. Aggressively price @30-40% lesser than the best seller and promote it as sponsored on their website.

Amazon launched its own smart oven line in 2014, exactly one year after June became a best seller at a ridiculous price point of $250.

Amazon's Superpowers and comparing it with Zomato

1. Amazon has an abundance of Consumer data (for eg: what you search, at what price point you search, where you live, your spending capacity based on past data among others) and so does Zomato.
2. Data of every seller including their exact product specifications, in case of zomato, data of every restaurant and their best selling dishes, optimum price and peak season of dishes.
3. Both the companies are digital real estate which means they own the space where your product, dish, the restaurant are listed.

Zomato's future plans: How it will become a goldmine

Zomato is planning to launch two more verticals that will completely transform the landscape and make it one of the goldmine investments :

1. Zomato Kitchen: This will be a cloud kitchen, which means that in a single takeaway kitchen, zomato will merge best-selling dishes of different brands and optimize it for peak season to maximize profit, both for brands and itself. For example, zomato can merge biryani with bun-maska with dhokla from different best-selling brands.
2. Zomato Hyperpure: The supply chain arm that zomato is slowly building will significantly reduce operational costs and time. For example, One delivery boy can pick and drop biryani, dhokla and bun maska from the same location, instead of three different locations.

So, all this was to inform you about one single thing: invest pennies in Zomato now to be a millionaire in future. Currently the shares are listed at 76 Rs a piece.

“The stock market is a device for transferring money from impatient to patient.”  → Warren Buffet