Swiggy raises platform fee by 50% to Rs 3 on food delivery orders

Swiggy had begun levying a platform fee to its customers in April regardless of the order value

Delivery platform Swiggy has hiked the platform fee on food delivery orders to Rs 3 from Rs 2, according to a report by The Economic Times (ET). The rise in platform fees was implemented on October 4.

Initially, the fare was increased in Hyderabad and Bengaluru, after which it expanded the charge across the country. Currently, Swiggy provides a Rs 2 discount after levying a platform fee of Rs 5, indicating that the fee could rise further. The company had begun levying a platform fee to its customers in April, regardless of the order value.

Swiggy's rival Zomato has also begun levying a platform fee of Rs 2, which then rose to Rs 3 in some locations.

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The platform fee is charged along with the delivery charge, which is waived for customers who subscribe to Swiggy's loyalty programme, Swiggy One. Under the programme, customers can avail of free delivery of food and groceries after making an upfront payment. Swiggy One subscribers also have to pay the newly levied platform fee. A Swiggy spokesperson told ET there has been no significant change to the platform fee, which most service players apply.

Raising such charges is seen as a step by delivery platforms to improve unit economics by increasing the take rate, or money they make, on every order. Uber, BigBasket's quick commerce vertical BB Now, and Zepto were also charging a per-order fee to improve unit economics.

According to information provided by Prosus in June, Swiggy's losses rose 80 per cent year-on-year to about $540 million in 2022. Technology investor Naspers had earlier said that Swiggy's gross merchandise value for food delivery increased 26 per cent year-on-year.

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Swiggy chief executive Sriharsha Majety stated in May that the startup's food delivery business had turned profitable as of March 2023. Majety had also said that the company made disproportionate investments in its grocery delivery business, Instamart and will be investing less in the business as it moves towards profitability.