Measuring Growth in Platform Businesses
Who wins when Zomato gobbles up UberEats India !
I thought of using the extra day (29th February ) by starting a weekly newsletter on issues that matter to me.
It would be sort of weekly affair and at times cryptic and personal (Usual Style) and hence more like a friendly chat rather than a podium lecture.
Didn’t I tell you that I am already missing you !
The newsletter currently has two sections- first, DTW dealing with Platforms & Business (Mostly Platform Businesses) ; Second, OTW dealing with Running and Life (to be read as Running my Life).
During the Week- DTW
If you can not measure it, you can not improve it- goes an insightful advice from Peter Druker, one of my favourite management thinker.
Zomato Grabs UberEats in a all stock deal was the headlines few weeks back. It set few of us thinking about the winners and losers in the deal. We actually recorded a small case discussion for the International Case teaching Day.
The larger puzzle is to identify the metrics which determine success of platform as a going concern. Is it Average Revenue per User (ARPU) brought in by your top users or new users ARPU? Or could we look at more competitor or marketplace related metrics.
Over last one year or so, I have been in regular touch with Naveen who is the founder of Trice Community App ! They have built a wonderful product which helps communities come together.
One of the questions we have been grappling with concerns measurement of Trice’s growth. Now, the multiple stakeholders have their own heuristics/yardsticks but an interested investor or even an academician-researcher like me might want to look for more data driven metrics.
From an operational perspective, I would be most concerned with the matching metrics. As an emerging marketplace, one of the primary objective is to ensure demand and supply matching i.e. no customer should face a stock out and no supplier should have an unsold inventory for a given time period. In other words, increasing match rates and tracking that progress should be an important consideration for a platform manager. Going back to the Zomato-UberEats, would the acquisition lead to better match rates for Zomato ?
From a business development perspective, I would also be interested in increasing the choices for the customers aka market depth for various product categories. At Trice, it would mean that we have enough participants for the various prodcut categories.It serves two purposes- one, it helps in better match rates(Fulfilment rates) for customers ; two, it commoditifies the supply. Would Zomato have more market depth going forward ?
If you want to read more about Metrics for Platform Businesses, you may want to read this insightful article from a16z.
https://a16z.com/2018/12/13/16-metrics-network-effects/
OTW- Over the Weekend
On Running and Life, I recently read “Made in India” by Milind Soman. An inspirational story told in an interesting way with enough drama from life, glamour and sports thrown in good measure. You could read my quick review on Amazon as well.
Do send in your comments on the form and content.
Hope to see you soon.
Thank you Sir for sharing the amazing article .
I would like to comment on the business perspective mentioned in the article in which I do strongly believe that the after the launch of Uber Eats in the Indian Market the days was something hard for Zomato as they simply have to put a lot more in their advertisement and other cost and at the same time uber eats already had a well established name and platform business running in the market which made the customers move easily from Zomato to Uber Eats mainly because of its first name .And this acquisition will for sure give a market depth in the coming future as I believe that atleast 60% customers which shifted the platform to uber eat will come back to Zomato in the coming days .
Sir Great article !! I think we can use some advice from you to how to find time after a full time job -which is quite demanding at ICFAI , Marathon practice ,family and then writing these articles .
In my opinion ARPU is not the driver here or the motivation behind the merger ,I would just look at that metric from purely an informative point of view .
It’s definitely the synergy that Zomato will get by means of consolidation . It’s becoming more of a monopoly scenario now from oligopoly with no significant player to challenge Zomato now .
Gaining on Market depth is 2nd major factor that I think would have ring the bells at Zomato .