Swiggy introduces platform fee on food delivery orders to maintain the platform.
A ‘platform fee’ of Rs 2 per order has been implemented by Foodtech Startup Swiggy in an apparent effort to increase income per sale and support the platform’s upkeep. According to a person with knowledge of the situation, the fees currently only apply to food delivery orders placed on Instamart in a few major cities. The insider further stated that the platform charge had only recently been implemented in order to “develop and maintain” the meal delivery service. “Platform fees are mostly used to maintain and expand the platform’s functionality and to keep it in excellent working order. This payment is comparable to the convenience fee for restricting tickets that many websites for booking travel and entertainment charge for seats and tickets. However, Swiggy will not use the collections from this fee for paying delivery partners, and will continue to use primary delivery charge collections to pay delivery personnel.”
FE was unable to determine whether Swiggy intended to impose the price in further cities, despite the fact that it also applies to Swiggy One membership subscribers. Industry estimates state that Zomato and Swiggy combined account for more than 2.5 million daily orders. A Swiggy spokeswoman said in response to FE’s inquiries, “The platform fee is a small flat price imposed on food orders. This cost enables us to maintain, develop, and upgrade our platform and app features to provide a flawless app experience.
Food delivery orders will now be subject to an additional fee at a time when consumer Internet platforms are under pressure to cut costs and expand with profitability as a primary goal. Start-ups have also been pushed to lay off employees and shut down projects that aren’t profitable because of late-stage ecosystems’ drying up of major capital.
Swiggy launched a restructuring exercise in January that resulted in at least 380 job cuts during an urgent town hall meeting. As a cost-saving measure, Swiggy also made the decision to close its meat delivery marketplace. Swiggy’s CEO Sriharsha Majety explained in an internal email to staff members that the growth rate for food delivery firms in India and throughout the world has slowed down in comparison to its anticipated estimates, forcing the business to review total expenditures.
Majety also mentioned that the business had previously over hired, which may have contributed to the latest round of layoffs. In addition, he noted that Swiggy’s food delivery company experienced substantial growth in 2021, led by a spike in demand during the second wave. Success with Instamart, its grocery delivery service. “We invested in expanding our teams to be able to meet the upcoming needs of the categories with some real optimism for the future. Two events have occurred in 2022, though,” Majety continued.
