Why Zomato is launching Zomato Pay? 💳
And it's learning from the big-brother Gojek.
Welcome to the 97th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Gone the days of Zomato Gold → Zomato Pro → Pro Plus.
There is a new kid in town with “Zomato Pay”.
Quick context 🗓
Hyper local apps launching a wallet or white labeled payment methods of their own isn’t new. Gojek did it in South East Asia, Uber did it with wallet & so on.
But, what’s up with this pay feature frenzy? 🙇🏻♂️
To understand this, we need to understand the hyperlocal business deeply.
First, most of them struggle with retention 🥲
This business is hard. How many times you see users checking prices for same purchase between Zomato vs Swiggy, Uber vs Ola, Flipkart vs Amazon? All the time.
Second, most want to solve for exit barriers 🚪
Every app company want to make it harder for it’s users to exit the ecosystem. In other words, everyone want to create an ecosystem like Apple.
Third, they want to make interest on float money 💵
Most of these apps ask users to load money into their app & use it on their next purchase. This generates short term interest gains on this float capital for the brand. In other words, everyone wants to have interest free cash from customers like Starbuck.
The insight goes even deeper 💡
What Gojek (the hyperlocal giant in SEA) understood in it’s early stages was it called the “Golden Triangle”. In simple words if a Gojek user uses the GoPay (similar to Zomato Pay) along with it’s other services, the user retains substantially higher on the Gojek app. This led to explosion of adoption focus for Gojek to make most if it’s users adopt to GoPay.
That’s exactly what Zomato Pay aims to do 🪶
It wants to solve for retention, exit barriers & float money with the Zomato Pay feature. And it wants to expand it to even dining experiences. Ask me why? The average order value (AOV) on dining is much much higher than it’s online food ordering AOV, simple.
But, it is a hard sell for Zomato especially with it’s restaurant partners 🥶
Considering the deep discounting Zomato Gold did with restaurant partners, it caused a huge backlash from most of it’s partners. This time around though, Zomato has a marketing gimmick at it’s hand.
Guess Zomato pay’s marketing pitch to restaurants 🧐
Short answer - in-app short videos (AKA Reels). Yes, Zomato Pay restaurants will get access to put up short videos to lure more walk-in customers & solve for in-app promotion.
Will this strategy work? Time will tell ⏱
But the direction is insightful. One of the key aspects of building a defensible business (especially in a commodity like online food delivery where you are always competing for market share) is solving for retention deeply.
We go deeper into the science of retention ✨
All in a 1 year community led GrowthX experience with top internet startup founders & leaders. If you are figuring out long term retention of customers & net dollar revenue, you should learn the framework deeply before you waste incredible time doing it on your own. Go to the GrowthX rabbit hole to learn the retention craft.
