Base Camp: Zomato scaling the Everest of Foodtech with Hyperpure
Face Mask, Gloves, Hospital-like smell, and a big fat parcel- this ninja-looking person is a regular delivery hero for us now. Coronavirus has made all of us dependent on food delivery, either in the form of cooked-restaurant food or as fresh groceries.
With COVID19 snatching away all the dining out fancies in our life, it is a real adventure for FoodTechs to compensate for the see-saw dip between Dining Out and Delivery now. The bloodbath to exist has intensified, with the likes of Amazon entering the Food Delivery business.
What makes more sense to you now- Entering a room bursting with people or moving to the next, sparsely populated and safer room? The latter is Zomato for you. With the delivery segments of the food chain worn out now, Zomato definitely made a smart move diversifying to the former segments of the supply chain- From farms to restaurants.
“We are trying to transform Zomato into a foods company, much like a farm-to-fork model. The goal is to have fresh and clean food for all.” -Deepinder Goyal, co-founder, Zomato, Nov’19.
Little did he know, COVID will pry upon its food delivery segment soon, and Indians will be more concerned about quality and hygiene than ever. To walk through Zomato’s journey since this diversification, let me begin with how HyperPure works and how I believe it’s a smart strategy amidst this existence crisis.
Setting up victory flags on the BaseCamp:
- The victory begins with Zomato befriending an experienced player before walking the uncharted lands. Hyperpure has actually been rebranded after acquiring Bengaluru-based WOTU, which was a B2B technology platform, serving as an online supplier of ingredients that restaurants needed.
- After this, Zomato strengthened its footings by adding warehouses that act as delivery hubs- a loud message shouting resolution to dominate the entire supply chain.
- With the whole setup being out there, Zomato needed customers- i.e. Restaurants to supply to. Zomato, initially being a food discovery & rating platform, had the perfect gear of customer confidence.
- Going along the lines of Sysco (World’s biggest distributor of food and related products to restaurants and other business establishments), Hyperpure intends to be an India centric solution of the same, which is not just a convenience for restaurants but also a huge fix in the ever-volatile supply chain at the farmer’s end as it promises to pay them as long as they deliver clean produce.
- Adding to the glory of its USP, Zomato partnered Equinox Labs, an independent food quality auditing firm, with the mandate to regularly test samples. Riding upon the wave of ensuring “Ghar k Khaana” (Home-cooked Food) quality, this proves to be a smart move to rope in customers. Zomato reports that 27% of its customers are affected by the hygiene ratings of the restaurant, therefore seizing the opportunity to control one factor here- Quality of ingredients.
Zomato makes money on every Hyperpure order, unlike its cash-burning food delivery business
Yes, that is surprisingly true. Hyperpure reported revenue of $2 million. Right now it supplies fresh ingredients to some 7,500 restaurants in Delhi and Bengaluru. In the coming months, it wants to be operational in Chandigarh and Hyderabad as well. By the next quarter, Hyperpure wants to be in 12 cities. While they bleed Rs 25 per delivery, in the food delivery segment. Here is what works in favor of this ambitious yet strategic shift:
- COVID 19 disrupting the traditional offline supply chains to an extreme end, restaurants might shift to online alternatives like Hyperpure for ingredients.
- Stress on hygiene & quality of food, accompanied by standard certifications, restaurants could again converge to Hyperpure.
- Advanced warehouses and Artificial Intelligence backed Inventory Management, Demand Forecasting- costs can be reduced par with competitive pricing.
- With literally everyone, from Mammoths like Amazon, to local startups, flocking into food delivery, the battle boils down to who has the best existing delivery infrastructure and capacity to a bleed, a race where Amazon seems to be the likely winner now
On a concluding note, Zomato has just reached the basecamp of acquiring the Foodtech supply chain in India, with the step in the right direction. With Payment defaults the seemingly threat here, or operational inefficiencies, COVID19 has pushed its agenda in a positive manner for now.
Until then, keep enjoying the discounted food! ☺
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