Foodtech major Swiggy gets costlier, starts charging consumers ‘platform fee’

Looking to control its operational costs, foodtech major Swiggy has now begun charging all consumers a “platform fee” of Rs 2 per order, irrespective of the cart value. Before consumers hit the order button, they would be well advised to check out the additional fee that will now be charged by the food delivery platform. The additional charges, initially rolled out for users in cities like Bengaluru and Hyderabad, are being levied only on food orders for now, while quick-commerce and Instamart orders have been exempted. Swiggy has not yet implemented the new fee in metro cities like Delhi and Mumbai. The platform fee, as of now, is only applicable on food delivery. It is different from the handling fee levied on Instamart orders, irrespective of whether people are Swiggy One customers or not. Although food delivery just got a wee bit more expensive for consumers, Swiggy has defended the move citing rising costs. It has pointed out that the charge is nominal and will go a long way in helping the foodtech major to run the platform and app smoothly. Needless to say, the news did not go down well with several Swiggy users. They lost no time and took to social media to voice their grievances against the extra platform fee levied on food orders.

Swiggy starts charging customers ‘platform fee’ on food orders in monetization push.

It begins at Rs.2, but with over 1.5 million order/day, the corpus collected will be a huge ++ into the revenue bucket.

— Narayani Gurunathan (@Narayani07) April 28, 2023

The new charge of Rs 2 may seem small, but it would create a large enough corpus for Swiggy to reinvest into its business as it delivers over 1.5 million orders each day, trade analysts said. The fee, which was rolled out in phases over the past week, is likely to be extended to other regions soon. The primary reason behind the move is the slowdown in the delivery business. “This company was no exception,” said Swiggy’s chief executive and co-founder Sriharsha Majety in an email to employees which also mentioned that the company was cutting 380 jobs. “The growth rate for food delivery has slowed down versus our projections (along with many peer companies globally…While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term,” the email read.

Looks like @Swiggy started adding platform fees now to its customers. Already the food prices are jacked up by restaurants due to platform fee they pay, now swiggy wants to collect from its users too.. 😔. pic.twitter.com/EN1murXkwr

— இராஜேஷ் மனோஹரன் (@manoharanrajesh) April 27, 2023

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The Bengaluru-based company’s rival Zomato’s chief financial officer, Akshant Goyal while announcing the company’s October-December quarter results also mentioned an “industry-wide slowdown” that hit after Diwali, around October. “This trend has been seen across the country but more so in the top eight cities,” Goyal said. Zomato, meanwhile, has however not introduced any platform fees yet. The introduction of additional fees will possibly help Swiggy lower its cash burn which “is a lot more than” what Zomato was burning, according to analysts at HSBC. In fiscal year (FY) 2022, Swiggy burnt around Rs 3,900 crore, compared with Zomato’s cash burn of Rs 700 crore. Despite that, the latter had more market share. In terms of revenue, Swiggy was larger at around Rs 5,700 crore compared with Zomato’s revenue of over Rs 4,100 crore. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.