Zomato’s CEO On API, Events, Monetization And Fresh Round Of Investment [Interview]

Past few weeks have been eventful for Zomato. They launched events section that marked their diversification from only restaurant listings and also served the motive of their re-branding from Foodiebay. They released an API for their data and have already got integrated in apps from MakeMyTrip and MapMyIndia. They also received fresh commitment of $3Mn from Naukri group and now this controversy over data theft with Burrp.

Here’s a QnA with Zomato’s CEO Deepinder Goyal on all that and more.

1. You recently got a commitment of $3Mn form InfoEdge. Where do you see major chunk of that going?

We have very good traffic levels in all the 10 cities that we are present in. So far, we are only monetizing around 10% of our traffic. So, yes, most of the funding will go into building a rock solid sales team which will helpus ramp up the revenue significantly. Also, we need to spend more on building a stronger brand name for Zomato. So we will be channelizing a healthy proportion of this round of funding for more intense BTL marketing efforts.

2. What is the current team size? How many of those are support and data collection executives?

The current team size is 85 people. 60% of our team right now is data collection, processing, maintenance and support. The rest is tech and sales.

3. The recent launch of Events section puts you in direct competition with local search engines like Asklaila and more particularly BuzzInTown. How do you see your offering different from their’s?

When we built Zomato (earlier Foodiebay), we focused on building a better product in terms of user experience, and providing our users with the best content possible. That’s what brought us so far. With events, we have approached it in the same way, better content and better experience. And given the response so far, I think we are hitting the right buttons with our users. So yes, anytime anybody asks us this question, we mostly end up with “we are not different, we are better!”.

4. What is the end goal with APIs? Is it going to be paid any time?

Not at all. The end goal is to disseminate our content to the end user through multiple channels. We are very aware of the fact that we will not be able to get to a 100% market share, but if our ecosystem of apps and websites can get close to that, it will be a big win for us. Also, using the brand logo for Zomato is one of the necessary conditions to get an unlimited API key from us. We are hoping that this will turn into a huge self sustaining marketing engine for us which will drive traffic as well as brand recall.

5. How do you enforce branding in the API?

Simply put, manually. While our trial API key has already been requested by over 500 developers so far, we believe that there will only be a handful of serious developers who will submit their apps for branding verification. Once we approve their apps to meet our branding guidelines, only then we issue an unlimited API key which will support a production level app. This way, we get to know who is using our API, for what purpose and also keep track of any misuse.

6. How much does a typical advertiser spend per month with Zomato?

On an average, we make around Rs 15,000 per month per restaurant business which advertises on Zomato. Apart from that, we also have a few long term corporate advertisers on Zomato.

7. Is there any per lead model also for revenue?

We are still experimenting with a few pay per lead models. Nothing close to flawless yet, but we are hoping to get there soon.

8. Any plans to do away with Google ads on the site? How much is it contributing to the total revenue?

Google ads actually contribute less than 0.25% to our revenue. Its actually meaningless. But we have a baseless superstition that having Google Adsense helps Googlebot discover new pages on Zomato.com faster. So we keep it, doesn’t harm anyone at all.

9. How does the online food ordering market look like? JustEat is getting pretty aggressive in offline promotion at restaurants, how do you see that affecting Zomato? Also, any plans to enter into transactional model like JustEat.

Online ordering is a substitute for our business model. We believe that we will only lose a few of our customers to a model like Justeat. And with our USP (quality content) and the wide range of restaurants available on Zomato, we think that our customers will always come back to us. Justeat’s offline promotions have not been hurting us so far, as our traffic is growing faster than ever and merchants get much higher volume of business from us than any other competing website.

10. You have been against the group buying model for local businesses. How do you see the incumbent players surviving the model? Is it a dying model? What can be tweaked here?

Most of the merchants we meet tell us that they will never go for group buying again. I agree that this model does have its sweet spots, but we can’t see how to scale and sustain this model. There is a limited supply of businesses, and only a few of them become repeat customers. We can already see “Deal Fatigue” starting to set in in India. I think that even after tweaking the model to something more operationally sustainable, it will be very difficult to get to something which is economically sustainable. I have a strong hunch that the incumbent players are either going to pivot and move out of this completely, or try to create a real time hyper-local deal market. For us, our slow and steady growth has been working wonders – we have never lost a client and our customers are the biggest evangelists for our products. And we’ve just started.

What do you think of Zomato’s product? Are they really better in terms of overall content or is menu their only differentiator?

[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]

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