Swiggy increases platform fee on food delivery orders: Here's why
Popular food delivery service Swiggy has increased its platform fee by 50%, from Rs. 2 to Rs. 3 per order. The new fee went into effect on October 4, starting in Hyderabad and Bengaluru before rolling out across India. Swiggy has been charging a platform fee since April, setting it at Rs. 5 but offering a Rs. 2 discount, making the effective rate Rs. 3 per order.
Rival Zomato's platform fee structure
Rival company Zomato also charges a platform fee of Rs. 2 per order, although in some cities, the fee is Rs. 3 for every delivery. A Swiggy spokesperson explained that charging a platform fee is common among food aggregators. The fee is intended to boost unit economics: the revenue generated by a business from each unit of sale or order. Companies like Uber, BB Now (BigBasket's quick commerce division), and Zepto also charge this fee.
Swiggy's financial performance and profitability
In 2022, Swiggy's losses increased by 80% year-on-year to around $540 million, as revealed by its owner Prosus. However, Swiggy's CEO and founder Sriharsha Majety stated in a blog post in May that the food delivery business became profitable as of March this year. The platform fee hike could be a strategic move further to enhance the company's financial performance and profitability.
