Food delivery giants Zomato and Swiggy have announced an increase in their platform fee from Rs 5 to Rs 6 per order in Delhi NCR, Mumbai, and Bengaluru. This 20% hike aims to bolster their revenues and profitability amidst a competitive market landscape.
Expensive Move for Profitability
While Zomato has already achieved profitability, Swiggy is targeting enhanced profitability ahead of its anticipated IPO launch. The platform fee increase is part of their strategy to achieve these financial goals without significantly affecting other service charges like delivery fees, GST, or restaurant commissions.
Evolution of Platform Fees
Initially introduced at Rs 2 per order last year, the platform fees have gradually risen to the current Rs 6. This adjustment reflects the companies’ efforts to maintain sustainable take rates in a competitive environment, balancing revenue growth with operational costs.
Impact on Consumers
The nominal increase of Re 1 per order may seem small, but given Zomato’s handling of approximately 22-25 lakh orders daily, this translates to a substantial daily revenue boost of Rs 25 lakh. Collectively, both Zomato and Swiggy stand to gain an additional income of Rs 1.25-1.5 crore daily from this fee hike.
Scope of Platform Fees
Currently, platform fees apply exclusively to food delivery services and do not extend to quick commerce services like Zomato’s Blinkit or Swiggy’s Instamart. These services charge handling fees instead, with Blinkit levying Rs 4 per order in Bengaluru and Instamart Rs 5 in Delhi.
Public Reaction and Feedback
Social media platforms have seen varied reactions to the fee increase, with some users expressing concern over the added cost burden. Questions have been raised about the benefits consumers, vendors, and delivery partners receive in return for these increased fees, with criticism directed towards perceived profit-centric motives.
Industry and Future Outlook
The decision by Zomato and Swiggy to raise platform fees underscores ongoing challenges in balancing operational costs and service charges. As the food delivery market evolves, these companies continue to navigate strategies to sustain profitability while meeting consumer demands and regulatory expectations.
Zomato and Swiggy’s decision to increase platform fees to Rs 6 per order reflects their strategic approach to financial sustainability and growth in the competitive food delivery industry. As they prepare for future challenges and opportunities, the impact of these fee adjustments will shape consumer behavior and industry dynamics moving forward.
