Zomato to Impose Rs 12 Platform Fee Per Order, a 20% Increase Ahead of the Festive Season
Zomato and Swiggy Adjust Strategy Amidst Slower Growth
In the dynamic world of online food delivery, both Zomato and Swiggy are adapting to changing market conditions by focusing more on quick commerce to offset slower growth.
Zomato, the Indian food delivery giant, has recently increased its platform fee on food delivery orders from Rs 10 to Rs 12. This move, according to Zomato, improves their take rates by approximately 22 basis points for every rupee added to the fee. With an estimated 2.3 million to 2.5 million daily orders, this translates to about Rs 3 crore in revenue every day.
The April-June quarter saw a 16% year-on-year increase in Zomato's gross order value to Rs 10,769 crore. While this is a significant figure, it represents a slower growth rate compared to the 20% plus growth rates in previous quarters.
Despite the increased platform fee, Zomato's quick commerce arm, Blinkit, is thriving. Blinkit's net order value climbed 127% year-on-year and 25% sequentially to Rs 9,203 crore, marking the first time that Blinkit's net order value has surpassed that of food delivery.
The parent company of Zomato, Eternal, reported consolidated revenue of Rs 7,167 crore in the April-June quarter. However, Eternal's net profit dropped 90% to Rs 25 crore due to higher investments and rising costs.
Meanwhile, Swiggy, led by CEO Sriharsha Majety, is also navigating the challenges. Swiggy's revenue rose 54% to Rs 4,961 crore in the June quarter. However, the company's losses widened to Rs 1,197 crore, primarily due to continued spending on Instamart, Swiggy's quick commerce service.
In response to these financial pressures, Swiggy has also raised its platform fee to Rs 15, inclusive of GST, in select pin codes. This increase, like Zomato's, is part of a broader trend among online food delivery firms to bolster margins.
The platform fee, a levy introduced in 2023 by both Zomato and Swiggy, has steadily risen from its initial Rs 2 to the current level. The increase in the fee on Zomato, in particular, has risen sixfold since its introduction.
Karan Taurani, executive vice president at Elara Capital, stated that the increase in the fee on Zomato has accelerated the company's target to hit 5% adjusted Ebitda.
As both Zomato and Swiggy continue to evolve their strategies, the future of online food delivery in India remains an exciting prospect.
