After posting a blog announcing 300 layoffs on Friday, restaurant aggregator Zomato published another blog on Sunday announcing the shutdown of its cashless payments business, branded Zomato Cashless.
Zomato had partnered with Emirates NBD, a Dubai-based bank to introduce the feature in February 2015. Cashless allowed diners to settle their bill without paying cash or physically swiping their cards at participating restaurants in Dubai, using a credit card. While the company had planned to expand the feature to other markets, Cashless wasn't rolled out in any other countries during the last eight months.
"For now, we'll be rolling back Cashless completely in the next 7 days," wrote Deepinder Goyal, Co-Founder and CEO of Zomato in a blog post.
"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," Goyal wrote.
The shutdown was due to a lack of product-market fit in its current form, as Cashless wasn't a part of the natural user flow for a typical Zomato user, and high customer acquisition costs, he wrote. Early adopters turned out to contribute to a significant proportion of the users, showing the product would not scale easily. "When it comes to deciding the success or failure of our products, we need to always look beyond the early adopters," Goyal added.
Enabling the Cashless feature required the participating restaurant outlet to be provided an iPad, which would charge the user's credit card through the Cashless merchant app.
"We were bearing the cost of the iPad at these restaurants. That cost alone (in hindsight) makes the business look unviable," Goyal wrote, adding that the cost of educating restaurant staff on Cashless was too high, and took continuous maintenance.
In closing, Goyal wrote that Zomato plans to bring back its cashless feature with Base, its cloud-based PoS system, and Book, its table management system, so that participating outlets won't have to install any additional hardware at the restaurant.
Founded in 2008, Zomato has $223.8 million (roughly Rs. 1,450 crores) in eight funding rounds so far, having raised $60 million in its latest funding round in September.
Zomato had launched its Whitelabel app for restaurants, which lets them create custom-branded native mobile apps on Android and iOS, and accept orders and integrate with Zomato's table reservation and payment features.