Swiggy begins charging users Rs 2 for each meal order in an effort to make money and boost efficiency
Written by Ankita Chakravarti Food delivery juggernaut Swiggy has started levying a small "platform charge" of Rs 2 per order on each user. You will be charged the fee regardless of the contents of your basket, thus you can have five things or just one order there and still be charged Rs 2. Your order quantity or the value of your cart won't cause the fee to change.
Due to a slowdown in the food delivery industry, Swiggy is making this step in an effort to increase income and save costs. The extra fee was first made available to customers in Bangalore and Hyderabad, but it has not yet been implemented in other significant cities like Mumbai and Delhi. The platform fee is only currently assessed on food orders; it has not yet been applied to quick-commerce or Instamart orders.
Sriharsha Majety, the CEO and co-founder of Swiggy, explained that the delivery industry's downturn, which has affected the company's growth pace, is what led to the platform fee implementation. "Compared to our predictions, the growth rate for food delivery has slowed down (along with many comparable organisations globally)." While we are fundamentally able to weather difficult situations thanks to our cash reserves, we cannot use this as a crutch and must keep looking for ways to cut costs in order to secure our long-term survival, Majety wrote in an email to the company's staff.
Given that Swiggy serves more than 1.5 million orders per day, analysts believe that despite the platform charge appearing little, it might provide a sizeable revenue stream for the company. Additionally, it is anticipated that other regions will soon be charged the fee, which will aid the business in controlling costs.
Zomato, Swiggy's main competition, has also been impacted by the industry-wide downturn. The trend was evident across the nation, but more so in the top eight cities, according to Akshant Goyal, CFO of Zomato, who made the statement in the company's October-December quarter results. Zomato hasn't yet added any platform fees, though.
The addition of the extra charge is anticipated to assist Swiggy in reducing its excessive cash burn compared to Zomato.
A representative for Swiggy has verified that a small flat fee is paid on food orders as the platform fee.
Swiggy outperformed Zomato in terms of revenue, coming in at over Rs 5,700 crore (roughly 763.4 million USD), as opposed to over Rs 4,100 crore for Zomato (approximately 550.3 million USD).