Zomato's Profit Streak Continues 📈

Hey there,

Zomato's done it again! Profits are up, and they're outpacing Swiggy.

Zomato and Swiggy, once neck and neck, are now on divergent paths. Zomato's post-IPO strategy has led to a profitable streak, outpacing Swiggy, which reported a loss of over ₹4400 Crores.

Here's a closer look at how Zomato is spicing things up:

1. Loyalty Pays Off: Zomato's Gold program has struck gold, indeed. With over 3.8 million members, it's not just a loyalty program; it's a growth engine.

   
   This initiative contributes nearly 40% to Zomato's Gross Order Value (GOV), showcasing the profitability of customer retention.

2. Blinkit's Turnaround: Initially causing a $1.1 Bn fall in Zomato's market value upon acquisition, Blinkit, Zomato's quick commerce venture, has reversed its contribution margin from a negative 7.3% to a positive 1.3%.

   
   This 29% sequential GOV growth signifies that Zomato's strategic bets are yielding dividends.

3. The Fee That's Free Money: The introduction of a nominal platform fee ranging from ₹ 2-5 may seem small to customers, but it's a strategic masterstroke.

   
   This small charge per order is subtly enhancing Zomato's unit economics, one delivery at a time.

4. The power of timing: Festivals, the IPL, and the ICC World Cup are not merely events; they're lucrative opportunities.
   

   Zomato's strategic timing to capitalize on these occasions is a lesson in market acumen, driving orders across all segments, from food deliveries to B2B and groceries.

These strategies, coupled with clear cost-cutting measures, have borne fruit for Zomato.

Looking ahead, Zomato's approach could serve as a blueprint for profitability in a sector famous for high cash burn. It's a mix of loyalty, strategic pricing, and capitalizing on the right moments.

The result? A potential reshaping of the food delivery industry, with Zomato at the forefront.

Yet, in the fast-paced world of startups, today's innovation quickly becomes yesterday's news. Will Swiggy's next move disrupt the market, or will Zomato continue to enjoy its top spot? Only time will tell.

✍️ Jargon of the day

PAT - PAT means profit after tax or net profit or profit available for equity shareholders.

Zomato earned a notable ₹36 crore this quarter, showcasing its financial health and operational efficiency.

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Cheers,
Hrishikesh