Swiggy, gearing up for an IPO, is contemplating doubling its platform fee on food orders from Rs 5 to Rs 10 in the coming months as part of cost-cutting measures before its public listing later this year, as reported by Moneycontrol.
The Bengaluru-based food and grocery delivery platform has initiated the introduction of the new fee on its app for select customers, according to screenshots seen by Moneycontrol. Previously, in April 2023, Swiggy began experimenting with a platform fee, initially charging an extra Rs 2 on certain food orders regardless of cart size.
A few weeks later, recognizing that an additional fee did not significantly impact order volume, Swiggy expanded the platform fee to all customers. While the fee has gradually risen to Rs 5, some customers still pay Rs 3 without clarification on the tiering rationale.
Swiggy’s move mirrors Zomato’s, which also increased its platform fee from Rs 2 to Rs 5 in some instances. Both companies, delivering around 1.5-2.5 million food orders daily, find additional fees beneficial for improving their financial health.
While Swiggy has not implemented the Rs 10 platform charge yet, it has teased a higher amount in the past. The company is likely to follow a similar pattern of discounting and subsequent fee hikes based on results.
Responding to queries, a Swiggy spokesperson stated, “Swiggy has not changed its platform fee, and has no plans for a significant increase in the near term. We’re always running small experiments to better understand the consumer’s choices. This was one such experiment, and we may or may not scale it up in the future if it doesn’t meet our goal of serving our users in the best way possible.”
Competitively, Zomato, initially hesitant about introducing a platform fee, later followed Swiggy’s path, introducing a Rs 2 fee. The food delivery market, experiencing slower growth, prompts companies to explore ways to sustain profitability, with both Swiggy and Zomato adjusting their platform fees in response to market dynamics.
Despite potential fee hikes, analysts believe customers remain price-sensitive, cautioning that a high platform fee of Rs 9-10 may not be viable in the current stage of the food delivery market.
