How Swiggy will earn Rs. 30L daily with new fee
Food and grocery delivery platform Swiggy has found a way to raise additional money of around Rs. 30 lakh every day. Do you know how? Well, from customers. The company has begun charging all users a nominal fee of Rs. 2 per order. Dubbed 'platform fee,' the new additional charge is currently applicable to only customers in Bengaluru and Hyderabad.
Why does this story matter?
Swiggy is one of India's leading online food aggregators. The country's food delivery platforms have been struggling due to a slowdown in the food delivery business. With investors tightening their purse strings due to macroeconomic headwinds and recessionary fears, achieving profitability has become the primary goal of these companies. Swiggy recently laid off 380 employees as part of a restructuring exercise.
The platform fee is only for food orders
Swiggy's new platform fee is only applicable to food delivery. The company has not introduced the fee on Instamart orders. The platform fee is different from handling fee the company levies on Instamart. The additional charges will be applicable whether you are a Swiggy One customer or not. It is yet to be levied in cities like Mumbai and Delhi.
It will help counter the slowdown in food delivery business
Swiggy delivers over 1.5 million orders every day, which means the company will be able to make over Rs. 30 lakh by charging the platform fee. This will be helpful for the company in its chase of profitability, especially considering the slowdown in the food delivery business. Swiggy's rival, Zomato, recently asked restaurants for higher commissions owing to the same reason.
Platform fee will help improve the business: Swiggy
"The platform fee is a nominal flat fee charged on food orders. This fee helps us operate and improve our platform, and enhance app features to deliver a seamless app experience," a Swiggy spokesperson said.
Swiggy hopes to lower its cash burn
Swiggy is hoping the platform fee will help lower its cash burn. In FY22, the company's revenue more than doubled to Rs. 5,704.9 crore. It was more than Zomato's, which has a higher market share. However, the same increment was seen in Swiggy's cash burn too. Swiggy burnt roughly Rs. 3,900 crore compared to Zomato's Rs. 700 crore.
