Swiggy Introduces Platform Fee as Order Volumes Rise

Quick Summary

• Swiggy has raised its platform fee for food delivery orders to Rs 14 (inclusive of GST), up from Rs 12, in specific high-demand areas.
• Teh fee hike was rolled out for certain pockets on Friday and may be reversed once the demand surge decreases.
• Platform fees are flat charges paid by customers; Zomato charges Rs 10 (excluding GST) as part of its food delivery platform fee.
• Swiggy’s losses doubled to Rs 1,197 crore in the April-June quarter, primarily due to higher investments in its instamart segment. Operating revenue rose by 54% yoy to Rs 4,961 crore during the same period.
• Swiggy initiated platform fees in April last year at Rs 2; the gradual increase is aimed at improving unit economics as margins remain a challenge despite high average order values (Rs 500-600).
• rival Zomato introduced similar strategies but hasn’t increased fees as October.
• New competitor “Ownly,” launched by Rapido, is offering lower commission costs (8%-15%) compared to Swiggy and Zomato’s range of 16%-30%, creating fresh competition.

Image Source: Reuters
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indian Opinion Analysis

The increase in Swiggy’s platform fee reflects ongoing attempts by food delivery giants to offset operational losses and improve unit economics amidst rising operational expenses, particularly investments like Instamart operations. While this adjustment may only marginally impact customer bills relative to overall order values (~Rs 500-600), it highlights a broader trend where aggregators seek sustainability while managing competitive pricing demands.

With new entrants like Rapido’s Ownly undercutting existing commission structures offered by both Zomato and Swiggy, market dynamics could intensify further. In such scenarios, customer loyalty may become pivotal if price sensitivity grows among consumers due to higher service charges layered over already inflating ordering costs. India’s evolving food-tech sector appears headed toward a balancing act between profitability needs and competitive pressures from emerging players who offer more affordable options.