Zomato will charge zero commission from restaurants on food orders
Zomato is having a good run. In April it said that it had made $49 million in revenue in FY2017 and limited the annual operating burn at $12m from the $64m in FY2016. Recently, it acquired delivery start-up Runnr in an all-stock deal and Nomura gave it a $1.4 billion valuation. Now, it's forgoing commission from restaurants on food orders. Here's more about it.
What is it all about?
Zomato is currently in talks with Alibaba's payments affiliate Ant Financial to raise up to $200 million in fresh capital. However, its "#MissionGiveBack" doesn't need to wait, as it is making enough money from its advertisement wing to fund new initiatives, such as this. The restaurant discovery and food ordering platform will charge zero commission from restaurant owners provided they fulfill certain criteria.
Enough reserves to go ahead
Zomato chief executive Deepinder Goyal said, "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 region." Therefore, it wants to show "token of appreciation for restaurant owners and small business owners on our food ordering network in India."
What are the criteria?
These criteria include the number of orders that the restaurant is processing with the start-up on a weekly basis, their ratings and whether the customers are genuinely pleased with their services, among others. Zomato said, "70% of our restaurant partner base qualifies" for the "#MissionGiveBack" scheme. According to reports, restaurant commissions make around 15% of Zomato's total sales.
An edge over Swiggy
This move is expected to give Zomato the much-needed edge to catch up with Swiggy. Although Zomato started in 2008 and Swiggy, in 2014, the former faced tough competition from the latter. Swiggy is also comfortably cushioned by the $80 million, raised from Naspers Ltd, Accel Partners, SAIF Partners and others in May. It was about time Zomato did something to turn the tide.
