Zomato is now focused on both growth and profitability unlike before when profitability was compromised over growth, even as the firm along with other listed companies is seeing a huge decline in share prices over the last few months, said Zomato's co-founder Deepinder Goyal in an interview with CNBC TV-18.
Commenting on its Blinkit acquisition, Goyal said, “Profitability has to happen and we also need to protect our long-term view of how this business will look 10-20 years from now. So, Zomato is racing for profitability and BlinkIt is becoming efficient every day.”
Goyal did not disclose any timeline as to when the company could be profitable.
“Even our largest cities like Delhi are growing as fast as the smallest towns. Every small area within Delhi is equal to a small town. The penetration is going up, and the frequency at which customers order is going up,” said Goyal.
“The business is growing and I think it will continue to do that for the decade,” he added.
Goyal added that Zomato could easily be adding more than 7 million transacting users every year, in the next decade.
Commenting on the rising inflation, Goyal said, “Inflation could be a minor blip for 3-6 months, but over the longer term we are very bullish about the business.”
Goyal's claim comes amid speculations over Zomato's growth curve plateauing, with COVID-19 fears fading away from restaurant customers and most of the pandemic-related restrictions being lifted.
Quick commerce
“Quick commerce is still in the stage where we are figuring out how it fits into people’s lives,” said Albinder Dhindsa, co-founder and CEO of Blinkit.
“We have been encouraged by what people are willing to pay for 10-minute deliveries. We are able to charge customers for the reliability and comfort,” he added.
“We have seen it in food delivery that people are starting to pay. Everybody wanted a free service four years ago and now they are willing to pay for the convenience that they get,” said Goyal. He added that discounts have dropped and are currently around 12 percent on Zomato now while it is much lower on BlinkIt.
“We may be able to bring down our last-mile delivery costs due to synergies, as well as pay our riders more on a per-hour basis,” said Goyal.
“Synergies exist across a lot of things like utilisation of last-mile resources, marketing to either of the user bases, tech, and physical infrastructure. It is an investment in the future and we are trying to invest as far out as possible from our balance sheet and as the business grows, recover that for ourselves,” said Dhindsa.
“We have identified a few common areas like rider utilisation, cross-utilise tech platform, market to each other’s user bases, and Zomato has a lot of experience working with local businesses like restaurants and we are trying to recreate the ecosystem for the products and services that we provide,” added Dhindsa.
Blinkit clocked Rs 58 crore in revenue in May this year while its EBITDA loss stood at Rs 107.7 crore. In the same month, Blinkit clocked over 7 million orders with an average order value of Rs 509.
NRAI
Commenting on the commission rates, Goyal said, “There is no question of bringing (take) rates down. I would say we are still not profitable and need to make some more money. We are not profitable yet so we will have to make money from somewhere. So we are absolutely not bringing down the rates.”
This comes on the back of a Competition Commission of India investigation. Issues such as bundling of services, data masking, deep discounting, lack of transparency and exorbitant commission are the among the matters that is being investigated.
Goyal added that Zomato is focused on food and quick commerce for the next 12 months.“We are waiting for the market to calm down. There is a lot of chaos, companies are running out of cash, and it will be very different from what it is right now. Next year, we will see what to do with the cash.”
10-minute food delivery
Zomato’s 10-minute food delivery is still in the pilot stage and Goyal adds that they are still gauging if the business will make sense and will work everywhere. Zomato will not be looking at further investments into it, for now, said Goyal.
As regards the shortage of ride-delivery partners, Goyal said that it is back to normal. Further, Zomato is also looking to hire 15,000-20,000 a week.
Adding to this, Dhindsa said that the challenge for BlinkIt is now to make 100 percent of its orders delivered in 10-minutes which currently stands at around 75 percent.
For the unversed, food and quick commerce players were facing a dearth of riders due to multiple factors at play. Moneycontrol reported how these companies are taking several measures apart from strategic deals to curb the attrition of delivery partners and tackle the shortage of gig workers.
Conflict of Interest
Dhindsa and Goyal also go back a long way. Both of them studied at IIT-Delhi between 2000-2005. Dhindsa also headed Zomato's international operations for two years before starting up Grofers. Albinder's wife Aakriti Chopra, one of Zomato's early employees who currently works as Chief People Officer, was recently elevated as co-founder, in recognition of her contributions to the company.
This has raised a lot of questions about the conflict of interest and the regulator is currently looking into the matter. Commenting on it, Goyal said, “We have always been transparent and I don’t know if there was anything more to tell. There is nothing to hide.”
Further, he added, “It's not easy to work with each other. We are very honest to each other and I don’t know any two people who would fight as much as we do.”
On June 24, Zomato’s board approved the acquisition of quick commerce company Blinkit for Rs 4,447 crore in an all-stock deal.
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