Less than six years after it launched, restaurant discovery guide
Zomato is the most recognisable name in its vertical.
The company has a fun identity - it keeps releasing infographics that
ooze style, and when .xxx domains became available, they quickly
launched a site dedicated to
food porn. Beyond
all the polish and design though, Zomato has been a success because they
have consistently offered a huge amount of highly accurate information.
To do this, the company still uses the old fashioned method of
feet-on-the-street - it's a slow process but you can rely on what you
find on the site.
However, once you've read the menu and got the phone
numbers, you'll still have to make calls, and go through the hassle of
placing your order yourself. There's a layer of friction, and Zomato has
been firm in saying that they're not getting into the online food
ordering business.
And it's in this gap that companies like
FoodPanda, JustEat and
TastyKhana have sprung up. In August,
the local search company JustDial also entered into the ordering space.
FoodPanda claims that it sees 60,000 to 70,000 daily unique visitors on
their website, while JustEat has approximately 20,000 people coming
every day. According to FoodPanda, the overall delivery market in India
in 2012 was at Rs 1,000 crore, and expected to reach Rs. 5,000 to Rs. 6,000 crore by
2017. Out of this, according to JustEat, 10-12 percent of the total market is
online ordering, and JustEat claims that the number of users is doubling
year over year.
Not without problems
When we asked Zomato
founder Deepinder Goyal why the company doesn't handle deliveries, he
pointed us to a blog post
by co-founder Pankaj Chaddah, saying that the logic still holds up to
this day.
In the post, Chaddah highlighted the lack of
customisation possible online, the poor logistics available in India,
and the fact that a pure technology solution that can be suitably
widespread isn't available. But that's not stopping others from trying.
JustEat
is an international brand, and it entered India in 2011, when the
company acquired an Indian startup in the same space, called Hungry
Zone. HungryZone was launched in 2006 by Ritesh Dwivedi as Hungry
Bangalore, but it took a lot of time to gain momentum. "Food ordering
was not an essential need in India back then, the idea was ahead of its
time," Dwivedi says. By 2008 however, they received their first round of
funding and started building a technology solution for the problem of
food ordering.

"There
are thousands of restaurants, and everybody will order within a short
interval. You've got around two hours for lunch and two hours for
dinner, and everyone wants the food right away," he says, and adds, "To
tackle this, we had to innovate on technology, because a manual
call-center isn't a solution, it can't be scaled up."
Internationally,
there are a lot of sites that handle online deliveries, including
JustEat of course, but there are plenty of problems unique to India,
which meant that Dwivedi's team had to rethink the techniques from the
ground up.
"For example," he says, "PIN codes. In the US and other
countries, all deliveries can be tracked very accurately with PIN
codes. In India it's completely different. You need to look at a lot of
other parameters when taking an address, unlike in the other markets."
Menus
themselves can be more complicated: "there are 40 types of Indian food,
menus have seasonal items, we need to separate veg and non-veg, and you
might have more than 300 items on the menu," Dviwedi says.
But
the biggest challenge they faced was in implementing the ordering
technology. He says, "Globally, we use a device like a credit card
swiper that prints out orders - but that's expensive and GPRS isn't very
reliable here, so we had to create our own wired, desktop solution.
Instead of having a custom machine from us, your computer which you
probably use for billing anyway becomes the point of contact."
While
there is a call center, it's not used for placing orders, but rather
for contacting customers in case any problems do come up. Goyal had told
us in an earlier interview that one of the reasons that Zomato doesn't
want to get into ordering is because customers will blame it in case of
cancelations. Dwivedi confirms that this is the case, and says, "we bear
the brunt of cancelations, and that is why we partner very carefully.
We track all the user feedback, and if there are many complaints about
your restaurant, we'll take it off the listings because we don't want
our brand to suffer."
We reached out to JustDial, which relies
much more on its call center in their operations, however the email id
on their contact us page didn't yield responses. However, as one of the
biggest local search companies in India, it's safe to assume that they
have the scale available to power a human-centric approach.
Mobile is speeding up
As
of now, JustEat sees mobile as a small part of their business, but it's
doubling yearly, and the split should be 50/50 by 2015 according to
Dwivedi. For FoodPanda, the numbers are only slightly different - around
25 percent of the site's users are coming from mobile, and their numbers are
growing at 60 to 70 percent annually.
Rohit Chadda, the co-founder and
managing director at FoodPanda says that the company's growth focus is
on mobile, which is being driven by Tier 2 and Tier 3 cities. Even more
interesting is the fact that while users of the desktop site outnumber
mobile users, people ordering from the app are both much more likely to
be repeat customers, and also much more likely to place a bigger order.

"We
also see a lot more mobile usage for dinner," Chadda says, "which makes
sense. In the day, in the office, they might be sitting at their
computers and they place an order somewhere. But when that guy gets home
from work in the night, he does not want to pull his laptop out to
order, specially not when the app works so well."
FoodPanda, which
was launched in 2012 by Rocket Internet, is also an international
platform, but according to Chadda, each country operates reasonably
independently, so his team can focus on building out a product with mass
market appeal here.
He says, "India accounts for a lion's share
but each part of the company is also pretty nimble. So right now we've
got some major redesigns and app updates coming up in short order too."
This
process is being led by the mobile devices, something which is a
priority today for JustEat as well. With a focus on convenience, and
extremely easy to use apps, the company's offering can be habit forming,
which is what they hope. Along the way, a strong community of users is
also rating and reviewing their orders, and this, both Chadda and
Dwivedi feel, is extremely important because unlike listings sites,
here, the reviews can be connected to specific orders and experiences.
Whether
this means that Zomato needs to get into the food ordering business is
unclear - these are early days for its rivals still, and it remains to
be seen whether they will be a lasting success in the market. What they
do prove though, is that at least the technical objections that the
company has to setting up ordering don't seem valid anymore. The
cultural ones, about people wanting personalised service might be harder
to measure, but the growth of this vertical does suggest that Zomato
might face unexpected pressure soon.
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