Swiggy, one of India’s leading food delivery aggregators, has raised its platform fee on food delivery orders by 50%. The new platform fee now stands at ₹3 per order, up from the previous ₹2. This change went into effect on October 4, initially in Hyderabad and Bengaluru, but was subsequently expanded to cover all areas of Swiggy’s operations across the country.
It’s important to note that Swiggy had already been applying a platform fee on food orders since April this year. The nominal platform fee was set at ₹5 per order, but Swiggy offered a discount of ₹2, which effectively brought the fee down to ₹3 per order.
Swiggy’s primary rival, Zomato, also charges a platform fee of ₹2 per order, though it was mentioned in the report that Zomato has implemented a fee of ₹3 in some cities.
According to a spokesperson from Swiggy, imposing a platform fee is a common practice among food aggregators, and there’s nothing unusual about it. Several other companies in the industry, such as Uber, BB Now (the quick commerce arm of BigBasket), and Zepto, have adopted a similar approach, charging a fee on each order. This platform fee is often seen as a strategy to improve unit economics, which refers to the revenue generated by a company from each unit of sale or order.
Swiggy’s decision to increase the platform fee is likely aimed at enhancing its unit economics and financial sustainability. In June, Swiggy reported an 80% year-on-year increase in losses, amounting to around $540 million in 2022, according to information shared by its owner, Prosus. However, Swiggy’s CEO and founder, Sriharsha Majety, stated in a blog post in May that the food delivery business had achieved profitability as of March that year.
By raising the platform fee, Swiggy can potentially offset some of its operational costs while continuing to provide a competitive and reliable food delivery service in an increasingly crowded and competitive market. This change is part of the ongoing efforts by food aggregators to find the right balance between offering affordability to customers and ensuring the financial sustainability of their businesses.
