2 0 2 1 meme R E W I N D . . . ZOMATO
Statistics of orders by Zomato and Swiggy.
The 5th StatEATstics Annual Report â Swiggy Diaries - Detailed report from Swiggy.
I couldnât find the detailed report from Zomato. Appreciate any assistance.
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Government charges 5% GST from today onwards .is Zomato need to bare this so that existing discounts are not get disturbed
This will further reduce current profit
5 % GST is on the restaurants, not on Zomato. It was always there, it is not new. Earlier, Zomato used to collect it from customers and pass it on to the restaurants, but the restaurants never remitted it to the government. Now, Zomato will directly remit it to the government on behalf of the restaurants. Something similar to how an employer deducts TDS and remits it directly to the government on behalf of the employee. There is no direct financial impact of this on Zomato, it will just make cheating by restaurants difficult.
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If only this was true.
Sharing an incident from August last year where I got charged GST twice both by the restaurant and by Zomato.
The restaurant price of 475 already included GST at 5%. And Zomato on their app charged me GST on top of that amount. And to top it off - Zomato charged me the incorrect GST rate as well. Instead of charging GST at 5%, they charged me GST at 18%!
Thankfully, I was alert enough to inspect the restaurant bill when the delivery happened and I made a big hue and cry about this, so they admitted the mistake in their software/communication with the restaurant.
I can accept every argument but Zomato charging the incorrect GST is tantamount to nothing else but âtax fraudâ in my book!
Now imagine all the thousands and lacs of Indians who are probably not as alert as I was.
And some people on social media are referring to your post as if every rupee of tax will reach the Government now!
Yeah right!!!
Collect 18% and give 5% to government 
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Thanks for your reply, especially for sharing an actual bill. I agree there is an issue, but it is somewhere else and not what we were discussing. Let me elaborate on how I see the it as an ordinary consumer, I am not a CA or a tax expert though.
When we order from Zomato, it will attract two incidents of GST. First is the 5 % GST food which the restaurant adds to their bill. This was Rs.452.38 * 5% = Rs.22.62 in your case. This is clear cut, no dispute about this. Earlier, Zomato would have paid the entire Rs.475 to the restaurant which in turn could have pocked the full amount themselves. With the new rule change, this Rs.22.62 will now be remitted by Zomato to the government on behalf of the restaurant. This is what I referred to in my reply.
Next, we engage Zomato to deliver this food to us. Delivery is a distinct service and Zomato seems to be collecting 18% of the entire bill amount as GST here. Ideally, GST here should be collected only on delivery charges. Hence, this should come to Rs.44 * 18 % = Rs. 7.92. Instead, Zomato has levied Rs.475 * 18% = Rs.85.50 as GST. This is clearly wrong. Full credit to you for being an alert consumer and noticing this.
I think Zomato does this as a conservative principle to protect themselves from future tax claims if any. The risk of a tax claim arises since Zomato shows the entire GMV (Rs.475 here) as their revenue. So this transaction can also be seen as a trading transaction â bought chocolate cake from Binge and sold it to Gujrot. Ideally only the delivery charges are Zomatoâs revenue but they want to inflate their P&L. They pretend to be a delivery company to the consumer and a trading company to the investors.
This practice is clearly wrong, though I wonât call it a fraud. Fraud is if they collect the tax and donât remit to the government. I feel ICAI should issue clear guidelines on how these transactions should be accounted. That is where the problem lies, according to me.
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How would their new investments effect Zomato? One investment looks quite interesting âAdonmoâ. Adonmo (founded in 2016) specialises in OOH digital advertising, enabling targeted ads at relevant localities using Hyperlocal Intelligence & patented tech. They are know for their LED screens mounted on taxis.
Indonesian gaints Grab and Gojek uses similar technology for additional revenue.
I used to work in Rapido as Lead product manager and this was one idea we were exploring too. Not sure if Zomato invested in that company for a similar approach. However there are lot of government regulations on using LED screens for OOH advertising.
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Unlike in western countries and China, food delivery companies may not enjoy similar success rate in India. One needs to look at social scenario for that. In the west and China:
- More than 70% of women are a part of work force.
- The average size of household is 2 to 3.
- This is true in large cities as well as small towns.
- Propensity to order out is huge when both parents are working.
- Food costs have been more or less stable, and ordering food is economical as compared to home cooking.
None of these factors work in India whereby ordering food is more of an occasion than a routine. Only selected pockets in large cities may see this happen. The only saving grace for the food delivery companies would be the sheer size of the market. Loss in frequency of orders may be made up by wider market base. But that would mean higher CAC and lower LTV of a customer which would continue to impact profitability.
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Kudos for such good analysis. But there is an economic concept which entails supply creates its own demand. This factor may play due to ever increasing pentration of smartphones in india. Further, children play significant role in such impulsive decisions apart front socio-economic conditions.
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Smart phone penetration and cheap bandwidth are both certainly a factor behind the rise of all e-com businesses. But even so, other factors would play a role in the success of such a business. In india the importance of home cooked meal over restaurant food is always stressed. As such ordering food may increase but I suspect it will more likely be an occasional/ weekly affair rather than a daily habit as it is in the West.
Very true. However, market size is very large and duopoly may favour subject to new entrant. Also zomato is investing in lot of startups, which may fruitfy in coming years.
Dis: Invested.
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From what I think, it is all about affordability for most of the customers. People who have less time and can afford a meal for the entire family will order for a home delivery. Who can afford and have time will go to restaurants, along with the purpose of spending time with families and friends.
For special or exotic dishes which cannot be tried at home, I guess home delivery suits best, in the sense that, if one is trying something for the first time, better to eat at home in case if it does not sit well with the stomach.
Time becomes limited as one gets old up to a certain age. So price plays the biggest role. And travelers eating in hotels like setups cooked by women has always been part of Indian history, and in this day and age many people are ready to adapt, at least trying new things, with technology at their fingertips.
Not invested.
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No sequential growth. Losses slightly lower.
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Q3 Updates
Much talked about profitability aspect- 30% of Biz ( mature cities) are at EBDITA break even.
Given extreme volatility and global tech meltdown, majority mkt is Pessimistic on this space.
Disc - SIP basis starting position post Q3 results.
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What I have said above is corroborated by Burger King India. Whether ordering food home or going out for dinner- the essence is frequency in India is far lesser than China. Its a big question when we will reach that number or even if we actually reach that number ever.
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Any idea on the market size of the lending business to the restaurants? Asking this because I couldnât find any data and Zomato has ventured into lending recently.
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Good writeup on Zomato and its many acquisitions.
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This was actually on the cards, just waiting to get triggered somehow.
Probably some negatives with some positives are there in this merger. Like to like companies i would think.