Inside Zomato’s Monetisation Stack: Where The Margins Come From In Food Delivery
Zomato's food delivery business contributes ₹606 Cr to Eternal's adjusted EBITDA, 6X more than Blinkit's ₹102 Cr, despite accounting for a smaller slice of Eternal's revenue pie today.
Intelligence analysis by Llama
Zomato's food delivery business is the lynchpin of the company, with a 5.6% EBITDA margin on a net order value basis compared to Blinkit's 0.6%. The company's adjusted EBITDA has grown almost 128% in the past two years.
Zomato's food delivery business is like a big team that helps restaurants sell their food to customers. The company makes money from a small fee on each order, and also from advertising and other services. This business is very important for Zomato's success, and it helps the company make a lot of money.
Analysis
A $60B Vote of Confidence
Zomato's food delivery business has been the backbone of the company's growth, despite accounting for a smaller slice of Eternal's revenue pie today. The business processes over ₹10,700 Cr worth of orders every quarter and serves more than 27.2 Mn monthly transacting customers. Zomato's food delivery business contributed ₹606 Cr to Eternal's adjusted EBITDA, 6X more than Blinkit's ₹102 Cr. This is a significant gap, especially considering that Blinkit's revenue has surpassed Zomato's in recent quarters.
Why Platform Fees Are A Game Changer
The per-order platform fee has proven to be a game changer for Zomato. Introduced in August 2023 at ₹2 per order, the fee has steadily increased over time and now the company charges ₹14.9 per order in most major cities. This fee has contributed significantly to Zomato's profitability, with the company's adjusted EBITDA growing almost 128% in the past two years.
The Role Of Upselling And Advertising
Zomato's revenue is not just limited to delivery fees. The company also earns from upselling higher quality services to restaurants, bringing them on to the food advertising programme, and getting sponsors in for moment marketing or seasonal promotions. These bonuses can take on a life of their own if the core marketplace is running smoothly. However, the success of these initiatives depends on the basic promise of the marketplace being fulfilled.
The Importance Of The Gig Economy
The gig economy plays a crucial role in Zomato's business model. The company's gig workers are the backbone of its delivery operations, and their efficiency and productivity directly impact the company's profitability. Zomato's ability to manage its gig workforce effectively has been a key factor in its success.
Key points
- Zomato's food delivery business contributes ₹606 Cr to Eternal's adjusted EBITDA, 6X more than Blinkit's ₹102 Cr.
- The per-order platform fee has proven to be a game changer for Zomato, contributing significantly to the company's profitability.
- Zomato's revenue is not just limited to delivery fees, with the company also earning from upselling higher quality services to restaurants and getting sponsors in for moment marketing or seasonal promotions.
- The gig economy plays a crucial role in Zomato's business model, with the company's gig workers being the backbone of its delivery operations.
If Zomato continues to grow its food delivery business and increase its platform fees, the company's profitability is likely to improve. Additionally, the company's ability to manage its gig workforce effectively will also be crucial to its success.
If Zomato's food delivery business experiences a decline in demand or if the company is unable to manage its gig workforce effectively, its profitability may suffer. Additionally, increased competition from other food delivery companies could also impact Zomato's business.
