Zomato's rise to power

How Did Zomato Crush Competitors to Rise as One of the "World's" Biggest FoodTech Companies?

I do not know about you but to me, when i hear the phrase - “food delivery startup in India”, only two startups come to mind - Swiggy and Zomato.

Zomato’s food delivery business has recently been enjoying a greater market share than any other startup in this space (roughly about 52-54% as of H1 2023). However, it has not always been this way.

Zomato was in fact lagging behind Swiggy until 2022.

Check out this article by YOURSTORY: INDIANS PREFER TO 'SWIGGY IT' MORE THAN ORDERING IN ON ZOMATO

So how did Zomato overpower a behemoths like Swiggy and claim its position to the top?

Well, this can be attributed mainly to Zomato’s marketing strategies and clever PR.

Ladies and Gentlemen, this newsletter is all about good marketing techniques and case studies that will help you understand the importance of good marketing. It doesn’t matter how good of a product or service you have, if you lack in marketing,

1. You will always lag behind your competition.

2. You will not be able to close as many deals as you wish you did &

3. You will not get customers to transact.

That’s how essential marketing is and I’m glad I can illustrate its importance through a case study like this.

A quick glance of the number of followers on all social media platforms for both Swiggy and Zomato will tell you that Swiggy lags behind Zomato.

But having a large social media following doesn’t quite tell you anything about the quality of the company itself. However, it is undeniable that a business with a significant number of followers on social media tends to inspire greater trust.

Zomato's refreshing humor on social media platforms elevates its presence to the level of popular meme channels on Instagram. However, what sets it apart is:

1. Firstly, Zomato is a household brand, adding a layer of familiarity and trust to its comedic approach.

2. Secondly, oftentimes the humor seamlessly integrates with a clear Call to Action (CTA). Alongside the memes, there's a prompt for immediate action, like placing an order on Zomato.

This explains how Zomato caught more eyeballs. Most times, more eye balls means more conversions (provided all other systems such as quality content, creative ad strategies are in place).

But now, let's explore other avenues where Zomato has showcased unparalleled marketing strategies to solidify its rightful position in the market.

When discussing food delivery startups, it is almost essential to mention loyalty programs.

Both Zomato and Swiggy have their loyalty programs solid now (as of 2024) with Swiggy having Swiggy ONE and Swiggy ONE Lite, Zomato having its Gold membership.

But it wasn’t always like this.

Things had taken an ugly turn for Zomato back in the day.

Zomato launched its loyalty program called “Gold” in 2017.

The gold membership offered a range of benefits including a complimentary welcome drink, 1+1 on food and 2+2 on drinks for all dine-ins and food deliveries, fifty percent discounts and much more.

The response was incredible and the people loved it.

But we are forgetting something here.

At the core, Zomato’s business model is that of an agency. It connects customers to restaurants, effectively serving as a middleman in the transaction.

Zomato made the customers happy by giving them a lot of benefits and no doubt. They overdelivered (which is a good thing in terms of value delivery. Remember to always exceed the customers expectations. This is what a business must do to be loved by its customers).

But Zomato failed to deliver (let alone “over”deliver) to the restaurants.

Zomato’s promise was obviously to drive more sales to these restaurants by brining in more people who dine out and bringing in more orders.

This failed to happen due to Deep Discounting. Deep discounting refers to offering products or services at significantly reduced prices, often well below their usual market value.

Deep discounting can significantly reduce the profit margins for restaurants, as they are often required to offer their products at a heavily discounted rate

Read more about this here: #Logout Campaign: Food tech aggregators like Zomato to end deep discounting

Zomato quickly discontinued this plan and brought in another revised loyalty program in 2020 called Zomato Pro. In August 2021 Zomato also launched Pro Plus, which was meant to go beyond the perks of the Pro, Zomato Pro Plus membership brought in additional benefits and exclusive features for the users.

It's important to note that both Zomato Pro and Pro Plus were not your typical "loyalty programs". While traditional loyalty programs emphasize rewards, these initiatives prioritized benefits over simple reward structures.

A Zomato Spokesperson told Economic times the following - “While Zomato Pro and Pro Plus have been loved tremendously by our customers and restaurant partners, we want it to be even more beneficial, especially for the most engaged customers and restaurant partners. We are taking, feedback and working closely with our customers and restaurant partners to craft a new program. Meanwhile, we are not onboarding new members and restaurant partners to Zomato Pro and Zomato Pro Plus”.

Later, to be on par with Swiggy’s ONE membership, Zomato reintroduced the GOLD subscription which gave benefits such as free delivery above a minimum order value of Rs 199 within the radius of 10kms, expedited food delivery, and a discount of 100 rupees in case of any delays in delivery.

This is loved by both the consumers and food merchants.

Apart from this, while it is uncommon for any food delivery startup to deliver from multiple restaurants at once, Zomato was one of the pioneers in this direction.

Zomato offers a multi-cart option where you could order from multiple restaurants. This offers extreme flexibility to those who want to get food from different eateries.

Ladies and Gentlemen, When you look at all these improvements from a height, you could understand why Zomato has taken huge leaps.

Lets take one good last glance at it :)

1. Posting Regularly on Social Media - Posting memes, making people smile, not worrying about making all the posts looking like ads and as if you are selling something is definitely Zomato’s key and in fact, the right way to go.

2. Incremental Improvements- Zomato did try experimenting with a lot of loyalty and subscription plans. Some didn’t work out and some were improved. Iterating, learning from past failures, and making incremental improvements are vital steps forward, and Zomato did exactly that.

3. Innovation Over imitation - Zomato offers a lot of flexibility and new features that no other food delivery startups offer. From the multi-cart option to discounts on dineouts, Zomato takes a promising lead in the market.

Ladies and gentlemen, this underscores the paramount importance of effective marketing and strategy in today's competitive landscape.

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