Zomato explains cashless shutdown

Source: Zomato

We launched our Cashless product in Dubai earlier this year to enable seamless in-app payments at restaurants.

Eight months on, we’ve decided to shut down the business due to a lack of product-market fit in its current form. While our users loved the seamless experience Cashless provided at their favourite restaurants, we believe the product could be far better - for merchants and users alike - while also being commercially viable. Here are some reasons the business didn’t take off, and our most important learnings for the future:

Using Cashless wasn’t a part of the natural user flow for a typical Zomato user. We had to lure the user to think differently - this was the most difficult part. In our Cashless product, we needed a user to think about the payment at a restaurant before the start of the meal, whereas they are accustomed to thinking about the payment only at the end of the meal.
We think most of our users were the avid early adopters of technology products. These users loved Cashless, but this product was turning out to be very hard to scale beyond that. When it comes to deciding the success or failure of our products, we need to always look beyond the early adopters.
The cost of educating restaurant staff on Cashless was too high, and takes continuous maintenance. To begin with, we were bearing the cost of the iPad at these restaurants. That cost alone (in hindsight) makes the business look unviable. Over and above that, the continuous training required for the workforce at restaurants (which sees high attrition in itself), sends the costs associated with running this business through the roof.
Summing it all up - customer acquisition cost was high. We all know that Cashless was a great user experience, and everyone who used it was delighted with the product and the convenience of not waiting around for the bill. But it wasn’t financially viable for us to keep the business running, as the operational costs of running it exceeded the commissions the product was generating for us. Over time, no matter what we could do, the unit economics were just not going to work.

The Future of Cashless

We will bring Cashless back to Dubai, and to more markets, once we have the ecosystem in place to counter the above challenges. We will do this with Base and Book - our Point-of-Sale and Table Management systems. For now, we’ll be rolling back Cashless completely in the next 7 days.

To make Cashless work, we will ensure that our table reservation system gets into as many restaurants as possible. Once that happens, the Cashless flow will become a natural part of a user’s journey on Zomato (where one can opt into using Cashless at the time of making a table reservation). Also, we then won’t have to install any additional hardware at the restaurant. Having our table reservation and/or POS systems on the restaurant premises will enable a truly Cashless experience for our users, as well as restaurants.

We’d like to thank everyone involved in this first chapter of Zomato Cashless. Once we have Zomato Book and Zomato Base in restaurants everywhere, Cashless will work better as a product and a business, and that’s exactly what we’re working towards.

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 October, 2015, 16:23Be the first to give this comment the thumbs up 0 likes

Yet another victim of the drastic differences in buying behavior across the "chasm" between innovators and early adopters on the one side and early majority and late majority on the other. 

THE STATE OF DIGITAL BANKING, 2019 - Landscape: The Digital Banking Strategy Playbook