Zomato has long since been bringing a lot more than food to the table — groceries, concert tickets, restaurant table bookings and more such.
Zomato has long since been bringing a lot more than food to the table — groceries, concert tickets, restaurant table bookings and more such.
Recently, however, it has brought all its services via apps under one umbrella brand and changed its name to 'Eternal'. The company has bypassed the tried-and-failed superapp strategy for a 'House of Apps' strategy.
"Superapps in India has not really worked out as customer experience is not great. Further, customers in India want low-touch services," says Madhur Singhal, managing partner at consumer and internet at Praxis Global Alliance, said. "The idea to have multiple apps/brands stems from the thought to have a brand stand for a specific thing in the consumer's mind and compete with its own set of competition for mind share."
While China has superapps like WeChat and Alipay, which offer the same platform for messaging, social media, and food delivery, Eternal's approach is more tailor-made for Indian services. Also, the company, which recently entered the elite club of Sensex 30, is also emerging into a diversified tech company, say experts.
"It has worked for international majors like Alphabet, which brought Google, YouTube etc. under it. Also, Facebook has rebranded into Meta with Facebook as well as Instagram, WhatsApp etc. under it. The backbone of Zomato's offerings is data and technology, which can be used to deliver food, last-mile delivery or more," opines brand strategist and author Ambi Parameswaran.
First Among Equals
Zomato has been growing organically and inorganically in the last few years after its core In food delivery business settled into a cosy duopoly with Swiggy. Zomato, which was the first among the major startups to list on the exchanges in 2021, also controversially acquired Blinkit right after the IPO in 2022. They tried operating it as a separate tab on the Zomato app, but did not see the desired results. It was phased out into a standalone app.
It also acquired Paytm's ticketing business, which later evolved into the District app, as well as the spin-off of their dine-in business. To compete with Zepto Café, which is showing good growth, Zomato joined the bandwagon with its Bistro offerings, with cloud kitchen-like offerings within 10 minutes.
A few marketing experts believe that tech at the core of many offerings as the world transforms to digital can be a winning strategy in the long term. The company has also been piloting many new businesses like an ambulance service, and has also spoken of offering staycations and more such.
"Zomato is really not only about food. It's incidental that it started with food delivery as a service. There is just no reason why Zomato cannot be a staycation, Zomato cannot be any kind of a garment brand, which is about youth and the young at heart. It can be 10 diff things and that is what is being unlocked as of today," says Harish Bijoor, a top marketing consultant.
A few marketing experts, however, have a contrarian view. "Indian companies want to be banyan trees, and want to do too many things with too many initiatives. Even if they have synergies, they would need management bandwidth. It would stretch resources and capabilities and the main business growth comes down," says Shiv Shivkumar, a management thinker who had earlier held top positions in HUL, Nokia, PepsiCo among others.
War Chest For New Ventures
To be able to branch off too many businesses, the company has prepared a war chest. It has recently raised Rs 8,500 crore via qualified institutional placement. "Inclusion in Sensex signals investor confidence and ensures easier access to capital markets. Zomato's IPO and recent financial performance have improved its war chest for strategic investments," opines Aditya Atluri, principal consultant at Kanvic Consulting.
Atluri also believes that Eternal will be able to look at other services like subscription-based groceries by expanding Blinkit offerings into subscription services for essentials. It can also look at health and wellness by partnering with fitness apps or launch healthy meal planning and delivery.
It can look at travel integration to include hotel and flight bookings with curate food recommendations for travellers. It could also look at financial services like introducing Zomato Pay credit cards or loyalty-linked wallets. It could also eye hyperlocal logistics and expand into courier or parcel delivery services.
"They will try new things, and abandon things that won't work out," says Parameswaran.
Platform, Not A Pipeline
Online businesses have long since been classified as platforms or pipelines. Pipeline businesses offer linear business strategies but platforms have multiple ways to monetise from their offerings. Zomato, even within its food delivery business, always had multiple revenue streams like commissions from restaurants, customer fees and advertising. If they'd be able to replicate it with other businesses as well.
Experts are also divided on the ability of large-scale platforms, such as Eternal being able to utilise data acquired from one app to drive growth in another service. For example, India's Digital Personal Data Protection Act, 2023, mandates obtaining user consent for data sharing and cross-selling.
There could be other ways in which cross-selling across apps by the umbrella brand could become difficult. "While there are no explicit laws prohibiting cross-sell data across services, selling private labels using data of restaurants will be a challenge as that becomes a conflict for Zomato who acts as a marketplace. While there are no laws prohibiting private labels (common practice among grocery retailers), anti-competitive agreements or favouring certain establishments are prohibited," says Singhal.
Blink And Miss
The hitch, however, comes from the fact that this growth could be a deviation from the much-touted path to profitability. Zomato has turned profitable in the first quarter of FY24, after it started operations in 2015. The heavy investments in new ventures made the street skittish. Its net profit in Q3 of FY25 has come down by 57% to Rs 59 crore.
The company has also been on an overdrive with its grocery expansion business. In the first quarter of FY24, the number of dark stores were 383, which now stands at 1,007 as of Q3 of FY25. This expansion has hit adjusted Ebitda (percentage gross order value) with loss at 1.32%, whereas the average loss was at 0.37% in the past three quarters.
While Blinkit's gross merchandise value grew at a spectacular 120%, it has come on the back of aggressive store addition. As per a few research firms, Blinkit expansion is a pit stop in the marathon to profitability. In fact, Zomato's stock had nosedived months into its listing, and had been subdued until it hit profitability in FY24. The hard achieved profitability has become tough to sustain, especially when the ongoing urban slowdown is eating into growth in its core food delivery business. Blinkit's pace of growth is an added cause of concern, and many peg that this business' profitability is at least one or two years away.
"Blinkit aims to have 2,000 stores by CY25, instead of CY26 earlier (from 1,007 as at end-Q3), which could hit the recent improvement in profitability. Doubling of store network may further delay profitability," says Elara Capital report, which cut the target price for the stock.
The Street is also worried about the competition in the quick commerce sector, and Blinkit's expansion into newer cities. "While the space (quick commerce) is well-capitalised, it is likely to see a supply glut of dark stores by the end of FY26/27, as many players in this land (MTU) grab phase overshoot the opportunity, thereby diluting order density; especially in top cities," says the latest report by HDFC Securities.
The cloud of being a loss-making company had long loomed over Zomato. Now that it's going Eternal with a lot more ideas under its wide spreading branches, the Street and experts alike are worried that it could turn into an eternal wait for it to match the profitability of its Sensex peers.
Katya Naidu is a senior business journalist who writes about equity markets, startups, energy, infrastructure, real estate and healthcare.
Sign Up with Google
RECOMMENDED FOR YOU
Rapido Triggers Price War With Swiggy, Zomato Within Days On Food Foray
Jun 11, 2025
Rapido's Next Ride: From Bikes To Bites, Challenging Swiggy, Zomato Head-On
Jun 11, 2025
Rapido Eyes Completely New Platform For Food Delivery Business — Profit Exclusive
Jun 10, 2025
Rapido To Charge Flat Fees For Food Delivery As Outrage Grows Over Swiggy, Zomato's Commission Charges
Jun 09, 2025
POPULAR