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Zomato

Assume that It’s the last weekend of the month and you are craving for biriyani. But you exhausted your monthly spending on food and entertainment. What will you do? Should you still go to order biriyani on Zomato at an exhausted budget? If I told you that you have one facility to order your food at BNPL which is nothing but the Buy Now Pay Later option. And when your salary gets credited, pay that bill.

Now well-known food ordering app Zomato sees this. Also, they want to help thousands of others who wish to do like you. Nowadays we saw more and more people looking toward the Buy Now and Pay Later (BNPL) option. We have some BNPL companies also. These companies provide you with some credit to buy something and pay that amount after some days. In this option which is BNPL Zomato losses are going to increase. But how? Let’s understand…

Let’s take a dip dive into the process of BNPL with Zomato food ordering. Suppose you order a biriyani as we take an example earlier. Now you have an option to choose the Buy Now Pay Later. So, you choose that and enjoy the biriyani. Suppose your order is worth 500₹. So, what will Zomato do here he approach the BNPL company that provides credit to you? Zomato gets its amount through the BNPL company. Now you have to pay that order amount in our case it’s 500₹ to that BNPL company. For this service, the company charges Zomato between 1-2%. In our case, the fees are 5-10₹.

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It Seems like no problem, right? Only 5-10₹ is the paltry amount as fees. But what if you sum up this number of millions of customers orders? Now it could be a significant amount to consider as the problem or losses. So Zomato losses crores of rupees when they enable this Order Now and Pay Later facility.   

Zomato wakes up one day and thinks that it is foolish to simply give away all that money to third party BNPL companies. To overcome this situation, they are come up with the solution that Zomato will be setting up its own BNPL company! That’s right a food delivery giant now wants to become a full-fledged fintech player.

Zomato is working on two things here. First, it will focus on its core business to grow. The dispersion of online food delivery in India is still very low. So, the company wants to habituate more people to order their food online. If we take a look at Zomato’s latest financials then you come to know that in the year 2021 nearly 50% of the customers who ordered food on Zomato were actually “new customers”. On these bases, we can say that there could still be an uncovered market that hasn’t warmed up to online food delivery apps like Zomato.

And now the company is going to bet on Order Now Pay Later. Because those customers will soon be prime customers for Zomato. After all, it’s a market that is booming like anything. It is expected to grow by 15X and 45–50-billion-dollar industry.

Conclusion:

Zomato is the largest food delivery app in India. It has millions of customers and restaurant partners. If the company successfully entered the BNPL segment it will be a huge benefit to the company as well as the customers also. Because when people pay later, they also tend to order more. Also, if they succeed in that they won’t just be saving money by their own BNPL company but they will also be taking a higher commission on the orders. So, they can increase their profitability as well as become a profitable business. What do you think about Zomato? Comment below and let us know.

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