Swiggy Raises Platform Fee to Boost Unit Economics, Extends Nationwide

Swiggy, the food delivery platform, increased its platform fee on food delivery orders from Rs 2 to Rs 3 on October 4. At first, the fare hike was introduced in Hyderabad and Bengaluru and later extended nationwide. Presently, Swiggy imposes a platform fee of Rs 5 but offers a Rs 2 discount, hinting at the possibility of further fee increases. Swiggy started charging this platform fee to its customers in April, regardless of the order amount.

Zomato, a competitor of Swiggy, also initiated a platform fee of Rs 2, which subsequently increased to Rs 3 in certain areas.

The platform fee is added to the delivery charge, but it’s exempted for customers who enrol in Swiggy’s loyalty program, Swiggy One. With this program, customers can receive complimentary food and grocery deliveries after making an initial payment. However, even Swiggy One subscribers are subject to the recently introduced platform fee. According to a Swiggy spokesperson, the platform fee remains in line with what most service providers typically charge, and there haven’t been any major alterations.

Elevating these fees is perceived as a strategy by delivery platforms to enhance their unit economics, aiming to boost the take rate or the revenue earned from each order. This practice is not unique to Swiggy; companies like Uber, BigBasket’s quick commerce service BB Now, and Zepto also impose per-order fees as part of their efforts to improve their unit economics.

Swiggy’s CEO, Sriharsha Majety, announced in May that the startup’s food delivery segment had achieved profitability by March 2023. He also mentioned that the company had made significant investments in its grocery delivery service, Instamart, but would reduce its investments in that sector as it aims to improve profitability.

With inputs from News18.

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