Zomato is incurring loss on each food delivery
Brief:
Livemint reports that Zomato incurred a loss of INR 2058 crore in FY 19.
It also increased its revenue by three times; from INR 476 crore to INR 1442 crore.
Is it good or bad?
Zomato justifies losses to grow and acquire customers. So, it’s good for them.
Customers get deep discounts. Zomato offers discounts up t0 50%. It also offers BOGO, which is buy one get one. Thanks to Zomato expensive food is available at a subsidy.
Why does it incur losses?
Zomato loses INR 25 per delivery. Last fiscal it lost INR 44 per delivery. Its last mile cost per delivery is now INR 65, compared to INR 86 last fiscal.
A rider delivers 14 times in 10 hours. Earlier it could only deliver 9 times.
Zomato also loses money in promotional marketing, to acquire new users.
Worth your time:
Zomato Annual Report; the future of food