Abstract

India-based Zomato was started in 2008 by Deepinder Goyal (Goyal) and Pankaj Chaddah as a restaurant aggregator and food delivery company with its headquarters in Haryana, India. After many rounds of successive funding, Zomato built its valuation. The company also grew, with operations expanding to different cities in India. Its growth was both organic and inorganic. In February 2018, Zomato crossed the $1 billion valuation. Goyal had tried to take Zomato into different businesses, like restaurant information, point of sale system, etc., but most of these failed. However, grocery delivery and quick commerce (Q-commerce) were areas he was not willing to give up on because of their potential. Quick commerce was a type of e-commerce wherein the focus was on delivering quickly – in around 10 minutes. With its popularity growing, there was a big race among the players to capture this attractive opportunity. Because of this, Zomato acquired Blinkit, a Q-Commerce player. But the acquisition brought with it a host of issues for Goyal to handle. Zomato’s share price fell after the acquisition as investors were not happy with the decision. The investment in the acquisition was very high and running the business called for future cash burn. There were also challenges with regard to retaining customers while trying to reduce the discounts to keep up the earnings.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Illustrate the food delivery business model through the business model canvas
• Differentiate between Q-commerce and E-commerce
• Analyze the economics model in the food delivery business
• Illustrate how customer acquisition costs can be recovered
• Draw Post-acquisition strategies to integrate the acquired company

Keywords

Zomato; Blinkit; acquisition; q-commerce; food delivery; economics of food delivery; customer acquisition costs; post acquisition strategies; integration; grocery delivery; business strategy; services marketing