Zomato, Swiggy Cash In on Festive Demand with Fee Hike

Food delivery platform Zomato has increased its platform fee to Rs 10. Soon after this, Swiggy followed the suit and increased the platform fee to Rs 10. The move has been taken by the platforms ahead of the increase in demand due to the festive season. 

Previously, Zomato and Swiggy were charging a platform fee of Rs 7. The fee, which is being referred to as the festive season platform fee by Zomato, is being charged by the company to maintain services during the festive season rush. This is as per a notification in the Zomato app. 

The platform fee introduced by both apps in 2023 has seen a sharp increase from Rs 2 in 2023 to Rs 10 in 2024. Now, a food item that was costing Rs 542 would cost Rs 545. While this may sound meager,  if we look at the broader aspect, across 800 cities, Zomato reportedly delivered 647 million orders in India in FY23. So, a Rs 3 hike would be huge for the platforms.

Read: Will Zomato, Swiggy’s Platform Fee Hike to Rs 6 Boost Unit Economics?

To simplify, platform fee is the fee that is charged for using a particular platform. When Swiggy implemented the platform fee in April 2023, a company spokesperson told Moneycontrol that the intent of the fee is to support the enhancement and operation of the platform. Soon after this, Zomato also implemented a platform fee in August 2023. Several other platforms have also implemented platform fees, such as Zepto, Nykaa, and Flipkart, which have also introduced these fees. Movie ticketing platforms such as BookMyShow and MakeMyTrip also add these services when customers book tickets. 

What is interesting is that this is coming at a time when the platforms are trying to capture the market due to an increase in demand ahead of the festive season. As per logistics firm Shiprocket, the Indian festive e-commerce market will reach $12 billion during the key months from October to December 2024. Furthermore, a research paper published by BofA Global Research predicts that throughout the festival season, rapid commerce platforms would produce $1 billion in gross merchandise value (GMV). 

Recently, Swiggy reportedly reduced the minimum order for customers to opt for free delivery to Rs 99. Additionally, Blinkit is also focusing on giving free delivery to platforms for Rs 199. Additionally, the platforms are also focusing on promoting all-night delivery. For instance, Swiggy Instamart recently highlighted that they are focusing on 24x7 free delivery in the Delhi NCR region.