Zomato Lays Groundwork for a Stateside Push — With Yelp in the Crosshairs

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zomato_app1_hi-res-l-3When Zomato opened shop in Dubai in 2012, the Indian reviews site was still a relatively small startup operating in a handful of Indian cities. But the company’s first venture into an international market turned out to be a remarkable success — and within six months, the site was generating more traffic than the total population of Dubai.

Now, Zomato is turning its eye to North America. Last week, the company bought UrbanSpoon from IAC in a move that thrust the restaurant-only reviews company into the spotlight of the American business press. Yelp, Google and others already compete with Zomato abroad to varying degrees of success, but the move marked a rare instance in which an international search firm was extended its reach into North America.

Zomato’s big pitch is curation. The company employs teams of agents in each market who go door-to-door, collecting phone numbers and menus, taking photos of restaurants and making lists of their favorite spots in each locale. We caught up with Deepinder Goyal, chief executive at Zomato, to talk about his plans for entering the U.S. market, why he thinks food search is shifting to discovery, and Yelp’s big mistake.

Zomato is a new brand for many of us in North America. How does what you do differ from other review sites like Yelp?
To start, we are not a user-generated content company. All of the listings that come into Zomato come from our agents, who go to each city and figure out which new restaurants have opened and which have shut down. They will take pictures, scan menus and find out whether a business delivers or accepts reservations. The depth of information we have for any given city is just much higher than other services.

It’s important to remember that for the first two years of Zomato, you couldn’t even write a review. It was all structured information. The original idea was to scan a bunch of menu cards, and then put them up on this very 1990’s-looking website with these blue HTML links. When we started out we were pretty low-tech. The cost of acquisition was very high, but we have fine-tuned the art of curating the content. The business model and overall economics of the business really work well.

The dynamics of the North American and Southeast Asian markets undoubtedly differ. What parts of Zomato’s current model will not work in the U.S. and Canada?
There’s a lot of rethinking which we’ll need to do before moving into the U.S. I actually don’t think our backpacking approach will work in the states. The sheer number of people we’ll need to hire is going to be a daunting task for us. I think we’ll have to use a hybrid approach. We’ll have to find a middle ground. In some of the more important cities, we might set up the full operations similar to what we offer [in India.] Then, in some of the smaller U.S.n towns we may not have anyone on the ground, and the operation will be strictly community-driven. We’re already going through the challenge of thinking through these problems.

One of Zomato’s defining features is that the product only serves restaurants. Do you think the restaurant vertical is large enough to support its own discovery site? Why not expand into other verticals?
For us, it’s a product-based decision. I just do not think you can justify searching for a plumber and a restaurant in the same search bar. That’s not how the world works. Our whole product experience is based around food and restaurants, and that differentiates us from a lot of our competitors Even for our smaller markets, where we were concerned about the size, we’ve been proven wrong: it’s just that no one has ever gone into the depth of the restaurant market.

So what’s the plan to beat Yelp?
In many ways, we’ve already done that. We’ve already beaten Yelp in a lot of international markets. Now, the larger markets of North America and Australia are the next step. We overlap with them in six countries and we’re much bigger than Yelp in each of these markets.

You pitch curation as a big part of Zomato’s service. Talk a bit about the way Zomato curates its experience, and the model it uses to support these efforts.
One thing we noticed is that when people open a application to find a restaurant, they often do not know what to search for. So we introduced Collections, which are lists of favorite restaurants that our teams in each city curate.

What’s remarkable is that we’ve noticed that over 50 percent of our traffic now comes from users browsing our collections. They’re not using the search bar anymore. That’s very different from the behavior you see in a lot of other apps. People don’t want to search — they want answers. They want to be told where to go.

Do you see that browsing behavior — that discovery-oriented search — as something unique to mobile?
Mobile has a much higher percentage of users using collections. A lot of our traffic from desktop comes from people who are in the office and want to order lunch. There’s not a lot of event-based research happening on desktop anymore. Most of the discovery is happening on the app right before you are going to make a decision.

 Steven Jacobs is Street Fight’s deputy editor.