Its rival, Gurgaon-based Zomato, also started charging a Rs 2 platform fee, which it subsequently increased to Rs 3 in some locations.
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The 50% increase in platform fee by Swiggy was implemented from October 4.
The Bengaluru-based company had initially started levying the fee in Bengaluru and Hyderabad, following which it expanded the charge countrywide. Currently, it charges the platform fee as a Rs 5 levy with a Rs 2-discount, indicating that the fee could eventually be increased further.
Also read | Consumer internet companies levy per-order charges to up margins
The platform fee is levied in addition to the delivery charge, which is waived for customers of the company’s loyalty programme, Swiggy One, who make an upfront payment and get benefits such as free delivery of food and grocery. However, the platform fee is also applicable to Swiggy One subscribers.
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Also read | Swiggy launches ‘Lite’ plan, bundling for One programme to take on Zomato GoldResponding to ET’s queries on the development, a Swiggy spokesperson said, “There has been no significant change on platform fee which is applied by most service players and is a common practice across industries. The platform fee is right now Rs 3 in the majority of cities we operate in.”
On October 10, ET had reported, citing a UBS report, that consumers were broadly agnostic to marginal increases in costs and that such non-delivery fees provided revenue upside and helped unit economics.
For the September quarter, UBS analysts estimated a better-than-expected growth for what is a seasonally weak period for food delivery platforms. The brokerage firm also pegged month-on-month volume growth of 7% and 6% in July and August respectively for Swiggy. This was ahead of 2% and 4% growth for Zomato in the respective months.
A move to increase such levies is seen as a step by platforms to improve unit economics by increasing the take rate, or money they make, on every order. ET had reported on September 2 that consumer-focussed internet platforms, including Uber, BigBasket’s quick commerce vertical BB Now and Zepto, were levying a per order, or per booking, fee in an effort to improve unit economics.
In 2022, Swiggy’s losses ballooned 80% year-on-year to about $540 million, according to information provided by Prosus in June.
Swiggy’s gross merchandise value for food delivery grew 26% year-on-year, the Dutch-listed arm of South African technology investor Naspers had said earlier.
It also levies a flat handling charge of Rs 4 on its quick commerce platform Instamart.
In May, Swiggy chief executive Sriharsha Majety had announced that the startup’s food delivery business had turned profitable as of March 2023, after factoring in all corporate costs and excluding employee stock option costs.
Also read | Zomato CEO Deepinder Goyal’s response to Swiggy’s food-delivery biz turning profitable
Majety had also pointed out that the company made disproportionate investments in its grocery delivery business Instamart and was likely to invest less in the business henceforth as it moved towards profitability.