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Exclusive: It’s party time for Zomato, ahead of potential IPO

Zomato, which is currently running a pilot in the National Capital Region, is hoping to cash in on people’s preference to party at home instead of going to public places. The food-delivery company has tied up with three- and four-wheeler service providers to make deliveries since bike riders cannot handle bulk packages.

December 18, 2020 / 12:06 PM IST

With more and more people preferring to party indoors, Zomato has seen a trend and is trying to cash in on it. For the first time ever, the food delivery firm is experimenting with delivery of party orders across the National Capital Region (NCR), according to sources privy to the matter.

This is going to push up order value for Zomato, which is gearing up for an initial public offering (IPO). The pandemic-struck company has only recently started to see an improvement — in October, it claimed that business was back at pre-Covid levels.

Zomato spoke about an industrywide recovery in gross merchandise value (GMV) in online orders, meaning that customers were ordering larger ticket-size items than earlier.

This could be attributed to the fact that people have now become more conscious about safeguarding their health and are ordering from hygiene-certified hotels and restaurants, even if that means paying a premium. Another aspect was that with more and more people working from home, orders are flowing in for more than one person in the family.

Earlier a lot of these orders used to be placed by officegoers for themselves.

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Party time

Needless to say, the opportunity in higher-ticket-size ordering has lured Zomato to plunge into the party ordering segment. The company has tied up with three- and four-wheeler service providers to make bulk deliveries since bike riders cannot handle bulk packages.

This will also help Zomato by reducing its overall delivery cost. On an average, a food delivery company spends Rs 50-60 to deliver one item to a customer. If 50 packets are being delivered at one place it automatically reduces the cost incurred in the delivery.

According to industry experts, the average size of food orders in metro cities is around Rs 300-400. While Zomato confirmed that it had ventured into bulk ordering, it did not comment on the average ticket size of these orders.

“We have been witnessing steady growth for big-size orders since the past few months. Customers have been utilising the specially curated discounts and restaurant partners have also been very keen to serve for such orders,” a Zomato spokesperson told Moneycontrol.

“We are currently running a pilot in Delhi NCR and are experimenting with different vehicles and delivery-bag designs to improve the delivery experience for orders containing larger-sized products like pizzas or multiple products,” the spokesperson added.

Zomato, currently valued at $3.5 billion, plans to file for an initial public offering (IPO) in the first half of next year, although it is unclear whether it will do this in India or the US.

Moneycontrol first reported on August 9 that Zomato is preparing for an IPO next year, and is hence looking to reduce its cash burn and get closer to profitability.
Priyanka Sahay
first published: Dec 16, 2020 12:31 pm
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