Swiggy, Zomato raise platform fee yet again to make the most of festive demand

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Swiggy Ltd. and Eternal Ltd.’s Zomato have increased platform fees in tandem, yet again, to capitalise on a surge in demand expected during the festive season that’s just getting started.

Swiggy and Zomato delivery boys.(HT)

While Bengaluru-based Swiggy has raised its platform fees three times in as many weeks to ₹15/order inclusive of GST, Gurugram’s Zomato has effected a 20% hike to ₹12/order, without GST. With nearly 20 lakh orders a day, Swiggy now stands to earn ₹3 crore daily just from platform fees. The figure is more or less the same for Zomato from 23-25 lakh orders/day.

To be sure, both Swiggy and Zomato are still facing cost pressures. Their quick commerce arms—Instamart and Blinkit, respectively—are still a drag on the bottomline, and that shows.

In the quarter ended 30 June, Swiggy posted a loss that widened to ₹1,197 crore even as operating revenue increased 54% to ₹4,961 crore. Zomato’s profit fell 90% year-on-year to ₹25 crore, on the back of revenue that surged 70% to ₹7,167 crore.

This highlights the need for additional revenue streams, like platform fees.

What is a platform fee?

A platform fee is added on top of the cost of items, delivery charges, restaurant charges, surge, packaging and GST. It’s mentioned in the breakup of a bill for a user.

The platform fee helps cover operational and logistics costs, improves EBITDA margins and unit economics, as well as offset losses from quick commerce, which is cost intensive. It serves as an additional (and lucrative) revenue especially with the festive season upon us.

On Wednesday, Swiggy and Eternal shares rose 1.19% and 1.16%, respectively, even as the benchmark Sensex ended the day 0.51% higher.

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