Zomato believes its delivery business is performing better than competitors: at current run-rate of 25,000 orders and average order value (AOV) of RS 475, Zomato?s ordering GMV is ~4.3 bn annually, compared to RS 6.5 bn combined for its two large competitors, which have ~25-30% higher order volume, but much lower AOV of `275. This implies a market-share of ~40% for Zomato, on a GMV basis. Zomato believes that its core advertising platform, which hosts user reviews, as well as the fact that it has better restaurants on its platform, ensures that its AOVs are better, and that restaurants give a priority to orders originating from Zomato.
Delivery business is ramping up fast?monthly growth of ~30%. Nearly ~80% of Zomato?s delivery orders are fulfilled by restaurants themselves, thus resulting in better gross margins for Zomato (~`20/order). For the remainder 20% of the orders, where Zomato delivers the order using a logistics partner?s network, it incurs a loss of `2/order. Zomato believes that the delivery model is unsustainable, at least at current scale, and intends to scale the order-aggregator model only.
