Zomato, Swiggy Increase Platform Fees By 20 Percent

Food delivery platforms Zomato and Swiggy have hiked their platform fees by 20 percent once again. From Rs 5 per order, the fees have now increased to Rs 6 per order in key markets such as Delhi and Bengaluru.

The platform fee is different from the delivery fee, restaurant charges, goods and services tax (GST), and handling charges. The higher platform fee is expected to roll out to other cities as well.

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Zomato’s shares rose up to 3 percent and hit a record high of Rs 232 on Monday, a day after the decision to increase platform fees was announced.

Last year, in August, Zomato introduced a platform fee of Rs 2, which was later increased to Rs 3 to improve its margins and earn profits. In April, it hiked its platform fee by 25 percent to Rs 5 per order from Rs 4 in major cities such as Mumbai, Bengaluru, Lucknow, Hyderabad, and the National Capital Region (NCR).

According to a report in The Times of India, Swiggy was planning a platform fee of Rs 7 in Bengaluru, which was discounted to Rs 6.

Through platform fees, the food delivery platforms seek to generate Rs 1.25–1.5 crore every day.

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If applied across all cities, a hike in the platform fees will have a positive effect of 30-35 basis points on profitability. However, such a hike is effective in selective markets only, according to Moneycontrol.

Zomato’s food delivery gross order value (GOV) is expected to rise to 22.9 percent YoY in the June quarter, as per ICICI Securities. Additionally, the food average order value (AOV) is expected to remain flattish and up 2 percent YoY, as per Business Today.