Zomato expects big contribution from small towns in 2020

Zomato on Tuesday said it expects tier III and IV cities to contribute 50 per cent of its monthly order volume by March 2020. Currently, Zomato's monthly order volume from tier III and IV cities remain at 35 per cent. This comes at a time when Zomato is stepping up to expand its presence across the country. Zomato said it is currently present in 556 cities and towns in India. Goyal said in a blog post that a majority of the launches across the smaller cities reached the initial 1000-orders-a-day milestone within a few weeks if not days. He added that while average order value is lower in non-metro cities by 20 per cent, the cost of delivery is lower by 50 per cent making the economics superior in comparison to the metro cities.

'India is coming of age'

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"Most of Zomato's cities and towns beyond the top 15 markets run profitably, and contribute to more than a third of our revenue. These cities currently contribute 35 per cent to our monthly order volume which will increase to 50 per cent by the time we expand to more than 700 cities (March 2020)," Zomato co-founder and CEO Deepinder Goyal said. "By all measures, our delivery business economics in non-metro cities is superior to metro cities," Goyal said.

According to Goyal, Zomato understands that the delivery business across India is a long game, the development and growth of these smaller cities contradict popular stereotypes about these cities Goyal also said Zomato is committed to developing cloud kitchens to bridge the supply gap.Talking about Zomato's future growth, Goyal said he thought that there are about 200 million people in India who will order food from Zomato about 5 times per month, with the top 20 million cohorts among these ordering more than once a day, every day.

"In the same breath, I want to re-emphasise that we will never compete with our restaurateur partners we will only build the kitchens but they will be operated by restaurant brands," he added. "These 200 million people (and in some time, many more than that) are the real India. And that India is coming of age... However, India is a market which is unique  here, companies that innovate and adapt will earn the right to serve the millions of India."

(With PTI inputs)