There have been speculations that Public listing-bound Swiggy may be planning to increaese platform fee to RS 10. These started after the company reportedly showcased a platform fee of Rs 10 to select users. This is sharply higher than the Rs 3 it currently charges most users. Incidentally, as a report in Economic Times said, the Rs 10 fee wasn’t actually charged to the users, but teased during checkout where they were shown the higher fee and then charged Rs 5 after a discount.
Swiggy has clarified the Rs 10 as platform fee. A Swiggy spokesperson told ET the firm had “no plans for a significant increase (in platform fees) in the near term”.
“We’re always running small experiments to better understand the consumer’s choices. This was one such experiment,” the spokesperson said in a statement.
What is Platform fees
Platform fees is the flat charge that food delivery companies charge from all customers across orders. They have become important as delivery companies look to improve their bottomline.
Both Zomato and Swiggy are turning to higher platform fees in their quest for profitability. The duo recently increased flat fees per order: Zomato to Rs 4 and Swiggy to Rs 3 (with a temporary New Year’s Eve peak of Rs 9 for Zomato). Notably, both began with Rs 2 fees in August and April last year, respectively.
This fee hike strategy comes as raising restaurant commissions becomes increasingly difficult due to potential backlash. Additionally, with Swiggy’s IPO on the horizon (and concerns about Prosus promoter status hindering share sales), exploring alternative revenue streams becomes even more crucial.
Beyond platform fees, both companies offer quick commerce delivery (Instamart for Swiggy and Blinkit for Zomato) with a Rs 4 handling fee in Bengaluru. Advertising is another avenue for revenue generation, though its significance varies.