Zomato Is Now Profitable; Flipkart Doesn’t Care About Profit
Zomato is now profitable
As the festive season for e-commerce and digital industry starts today, with the roll out of Big Billion Sales from Flipkart, to be closely followed by Amazon’s Great Indian Festival and Paytm and Snapdeal’s special festive season, the question about profitability is once again making a comeback.
And this dance of profit never ceases to end.
While Zomato founder Deepinder Goyal has claimed that their company is now profitable, Flipkart’s CEO has shocked everyone by saying that profitability is not their highest priority now.
What is the truth?
Zomato Founder: We Are Now Profitable!
In a blog post, Zomato founder Deepinder Goyal has shared a very important news: Their company is now profitable, and they are doing good.
For the critics of Internet and Digital industry, this is indeed a revelation, because some of the biggies, including Flipkart and Snapdeal haven’t been able to claim this, till now.
As per Goyl, their main markets: Asia, SouthEast Asia and Middle East Asia are now churning out profits from advertisements.
He said, “Our core advertising business in India, Southeast Asia, and the Middle East – the three key regions for us, is generating enough cash to cover for the millions of dollars of investments we are making into the rest of the regions, and our new businesses (like online food ordering, table reservations, Zomato Gold, Zomato Base, etc.)
In fact, buoyed by the profits, Zomato has decided to charge 0% commissions from those restaurants, which are meeting their standards. And as per Goyal, this means 70% of restaurants on Zomato will no longer pay any commission to them.
He said, “We are rolling out a token of appreciation for restaurant owners and small business owners on our food ordering network in India. What’s that? Zero commission for all food orders placed through Zomato.”
This is indeed a great news for the entire eco-system of Internet and Digital startups.
Flipkart CEO: Profitability Not The Highest Priority!
Meanwhile, in an interview, Flipkart CEO has Kalyan Krishnamurthy has hit back at the critics who were demanding profits, by saying that profitability is no more their highest priority, at least today.
When asked that if smartphones continue to be their largest selling products, how will they touch profitability (because smartphones have very less margin).
In reply, he said, “Profitability is not the highest priority today..”
He said that they want to go into a “consumer market building mode and expanding the market”, and they want to “bring as many people as possible into the e-commerce fold..”
Regarding the amount of money they are spending, he said, “We are very comfortable on the burn that we have today. Burn is not a metric that anybody worries about any more..”
If you ask a traditional business pundit regarding this statement, then certainly some confusion may arise, as profits is the very purpose of any business.
Amazon India must be closely following the news.