Deepinder Goyal’s net worth exceeds Rs. 8,300 crore. The billionaire explained how Zomato makes money.
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LifestyleTranscript
00:00So we had once raised a billion dollars.
00:01We had almost nothing in our bank at that time.
00:03And from that, a rider...
00:04All the costs were taken out.
00:05So it's difficult to make 5-10 rupees.
00:07Yes.
00:08It's difficult to make 1-2 rupees.
00:10Wow.
00:14We had once raised a billion dollars.
00:16We had almost nothing in our bank at that time.
00:18Hmm.
00:19But how did you move forward from there?
00:23We sold our UAE business.
00:26$170 million came from there.
00:28Then we kept fighting slowly.
00:31We kept working hard.
00:32And again, the same approach.
00:36We have only this much money.
00:38We have to reach here.
00:40We have this much time.
00:41Gun to your head.
00:42Solve it.
00:46How does Zomato earn money from exactly one delivery?
00:50So...
00:53There are some customer charges.
00:55And there is also a commission from the restaurant.
00:58Because orders are being generated for the restaurant.
01:00Yes.
01:01And...
01:02So there will be a marketing fee in a way.
01:04And we have to pay the rider as well.
01:07Hmm.
01:08So some money is coming and some money is going.
01:12Okay.
01:13The whole goal is that the money that is coming should be more than the money that is going.
01:16Okay.
01:17If a customer has spent 100 rupees on Zomato.
01:22On food or on delivery charges.
01:27Okay.
01:28Let's say 200 rupees total spend of customer.
01:30We don't make money on an order of 200 rupees.
01:33Okay.
01:341000?
01:35It becomes decent at 1000.
01:36How much?
01:38At 1000...
01:41Actually, it comes at 300.
01:44The average is 300.
01:45Hmm.
01:46Our averages range from 300 to 400 depending on the city.
01:49So let's assume an average of 400.
01:51If the average order value is 400.
01:53Then our commission will be around 80 rupees.
01:58Okay.
01:58The commission is around 20%.
02:00It is less than 20.
02:01It will be around 17-18.
02:04Within that range.
02:05So let's assume 80 rupees.
02:07And the customer delivery charges will be around 20-25 rupees.
02:13Correct?
02:14So the revenue is around 100 rupees.
02:16Nothing else.
02:18And the cost of delivery.
02:2360, 50, 70 depending on the city.
02:26Correct.
02:27And distance.
02:29If the distance is more, then the cost is more.
02:30If the distance is less, then the cost is less.
02:33Then customer support charges.
02:35If you chat, then our agent's cost.
02:38Okay.
02:38Payment gateway fee.
02:41If you don't like the food.
02:43Then you have to refund.
02:45Hmm.
02:49How do you give such big discounts sometimes?
02:52The discounts are very less.
02:54But they used to be there earlier.
02:55They used to be less earlier.
02:57Okay.
02:57It seems more.
02:58Okay.
02:5950% off up to 80.
03:01It is not 50% off.
03:03It is 80 rupees off.
03:04Hmm.
03:05There is an order of 400 rupees.
03:07It will be 20%, right?
03:08Yes.
03:09Nice.
03:10I want to change it.
03:11But I don't call this discounting honest.
03:15Okay.
03:15Discounting should be honest.
03:16If you are telling anything to the customer,
03:19it should be honest.
03:20It should be 80 rupees off.
03:22It should not be 50% off up to 80.
03:24But if the competition keeps doing this,
03:26then I won't be able to do this change.
03:27You are basically roughly making 80 to 100 rupees off an order.
03:30That's revenue.
03:32Then from that...
03:33All the costs are gone.
03:34So it is difficult to make 5-10 rupees.
03:36There are profits.
03:38Yes.
03:38But 5-10 rupees all over the country.
03:40I mean, where do you make 5-10 rupees?
03:42After that, there is a fixed cost.
03:43All the team, all the tech, server cost, all this and that.
03:47It is difficult to make 1-2 rupees.
03:49Wow.
03:50But at scale,
03:51out of the core profit of 1-2 rupees,
03:54how did you become profitable?
03:56I started making 1-2 rupees, so I became profitable.