Food delivery major Swiggy teases doubling platform fee from Rs 5 to Rs 10

The Bengaluru-based firm claimed that the increased fee is an experiment tested amongst a "small set of users" and the company is not planning a significant hike any time soon

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Food delivery major Swiggy is teasing a potential increase in its mandatory platform fee, charged from users, from Rs 5 to Rs 10 as it looks to improve its margins in the lead-up to its anticipated public listing later this year.

Although the on-demand convenience platform has not yet implemented any hike, it has teased the new fee on its application for select users.

The Bengaluru-based firm claims that the increased fee is an experiment tested among a “small set of users”, and the company is not planning a significant hike anytime soon.

“Swiggy has not changed its platform fee and has no plans for a significant increase in the near term. We’re always running small experiments to better understand consumer choices. This was one such experiment, and we may or may not scale it up in the future if it doesn’t meet our goal of serving our users in the best way possible,” said a spokesperson for Swiggy.

The company had, in April last year, introduced a nominal fee of Rs 2 for select users, which it later expanded to all its customers. It subsequently increased the fee to Rs 3, before now charging users Rs 5.

Swiggy’s Gurugram-based rival Zomato also charges its users a similar platform fee.

Zomato introduced a Rs 2 platform fee back in August last year, which was increased to Rs 3. Notably, Zomato had recently increased its platform fee to as much as Rs 9 in certain markets due to a spike in demand during the new year.

Regardless, Swiggy claims that it is working towards making its platform more affordable to users.

“We’re always looking for ways to make our platform more affordable, and our latest offering, Pockethero, is another example of that. Pockethero is designed for budget-conscious consumers, and we’re expanding it across the country right now,” the Swiggy spokesperson added.

In the lead-up to its initial public offering later this year, Swiggy has been cutting costs and undergoing retrenchments to improve its financial health. This includes layoffs and shutting some of its business verticals over the past year. Its new platform fee is also seen as a step in this direction.

As a result, Swiggy’s food delivery business turned profitable in the January-March quarter of 2022-23 after considering corporate costs and excluding employee stock options.

According to filings from Swiggy’s largest investor Prosus, Swiggy’s core food delivery business grew 17 per cent to deliver a gross merchandise value (GMV) of $1.43 billion in the first half (H1) of 2023-24 (FY24). This was less than that of Zomato which reported a GMV of around $1.84 billion during the same period.

Meanwhile, its trading loss in the food delivery platform reduced to $208 million in H1FY24, compared to $321 million in the corresponding period a year ago.