So what do you do when you have multiple ways of making money? You look at your growth category and you realize that you need to grow really fast. But then, your (smarter/aggressive) competition has raised a massive round – so you need to attack where it matters the most.
Let’s just bring all their business to your own platform. How? Charge no money to vendors!
It may not impact you directly because you can still make money from the other sources – but your competition whose entire model is based on ‘that’ growth category will bleed.
So yeah, Zomato has launched ‘ZERO’ commission on food ordering – a direct assault on Swiggy (which recently raised $80mn).
In “Trying-to-be-nice” wordings:
“Our core advertising business in India, Southeast Asia, and the Middle East – the three key regions for us, is generating enough cash to cover for the millions of dollars of investments we are making into the rest of the regions, and our new businesses.
To mark this momentous occasion for us (and Indian tech startups in general), we want to give back to the community which has played a significant role in our journey – restaurant owners. We are rolling out a token of appreciation for restaurant owners and small business owners on our food ordering network in India. What’s that? Zero commission for all food orders placed through Zomato. (source)”
Basically, get all restaurant owners to move their online ordering to Zomato.
By the way, Swiggy charges 30% commission fee.
Swiggy’s revenue per order (the 30% that is being talked about) is a blend of 3 parts, the commission we get from the restaurants, delivery fee charged from the consumers and discretionary advertising revenues.
And Zomato will charge ZERO.
Why in the world would a restaurant stick to Swiggy, unless it is providing a very differentiated experience?
Note that the world now knows about Swiggy’s business model, thanks to the anonymous troll post.
As far as Zomato is concerned, well played.
