Swiggy Raises Platform Fee by 50% to ₹3, Significantly Impacts Food Delivery Orders
Swiggy, the popular food delivery aggregator in India, has recently increased its platform fee for food delivery orders. According to a report in The Economic Times on October 16, the platform fee has been hiked to ₹3 per order, marking a 50% jump from the previous fee of ₹2.
This revised platform fee has been implemented since October 4 and initially applied to food orders in Hyderabad and Bengaluru. However, it has now been expanded to cover all areas of Swiggy’s operations across the country. The decision to raise the platform fee aims to enhance the company’s unit economics, which refers to the revenue generated per order.
It is worth mentioning that Swiggy’s main competitor, Zomato, also charges a platform fee of ₹2 per order. In some cities, Zomato’s platform fee is slightly higher at ₹3. This indicates that charging a platform fee is a common practice among food aggregators in the industry.
The platform fee charged by Swiggy is ₹5 per order, but the company provides a discount of ₹2, resulting in an effective rate of ₹3. This discount is intended to attract more customers and encourage them to use the platform for their food delivery needs. However, with the recent increase in the platform fee, customers might think twice before placing an order, as it will directly impact the overall cost.
Swiggy’s spokesperson emphasized that charging a platform fee is not an unusual step and is a standard practice in the food aggregator industry. Other companies, including Uber, BB Now (the quick commerce arm of BigBasket), and Zepto, also apply this charge to maintain their unit economics.
This move by Swiggy comes at a time when the company is facing financial challenges. As per the information shared by its owner Prosus in June, Swiggy reported an 80% increase in losses to around $540 million in 2022. However, Swiggy’s CEO and founder, Sriharsha Majety, claimed in a blog post in May that the food delivery business had become profitable as of March this year.
The increase in Swiggy’s platform fee has sparked various reactions among customers. While some believe it is a necessary step for the company’s sustainability, others are concerned about the impact on their expenses. The industry will be closely monitoring the consequences of this fee hike, as it could potentially reshape the dynamics of the food delivery market in India.
In conclusion, Swiggy’s decision to raise the platform fee on food delivery orders to ₹3, a 50% increase from the previous fee, has significant implications for customers. While the company aims to improve its unit economics, customers may need to evaluate the overall cost before placing an order. As the competition in the food aggregator industry intensifies, it remains to be seen how customers and other players in the market will respond to this change.
