Zomato Increases Platform Fee to Rs 12 Per Order, 20% Boost Before the Festival Period
In a strategic move to bolster margins as the growth in the online food delivery segment slows, Zomato and Swiggy have announced increases in their platform fees. This trend, observed among online food delivery firms, aims to offset slower growth and improve take rates.
The parent company of Zomato, Eternal, reported consolidated revenue of Rs 7,167 crore, with its quick commerce arm, Blinkit, being the standout performer. Blinkit surpassed food delivery in terms of net order value for the first time, recording a net order value of Rs 9,203 crore.
Zomato increased its platform fee on food delivery orders to Rs 12 per order, up from Rs 10. This increase, timed with the expected surge in demand during the festive season, is expected to accelerate the company's target to hit 5% adjusted Ebitda, according to Karan Taurani of Elara Capital. On the other hand, Swiggy has raised its platform fee to Rs 15, inclusive of GST, in select pin codes.
Karan Taurani also noted that the fee on Zomato has increased sixfold since its introduction. For every rupee added to the platform fee, Zomato's take rates improve by about 22 basis points. Zomato's new platform fee of Rs 12 per order generates approximately Rs 3 crore in revenue every day.
In the April-June quarter, Zomato reported a 16% year-on-year increase in gross order value to Rs 10,769 crore. The company's net order value climbed 127% year-on-year and 25% sequentially. Swiggy's revenue rose 54% to Rs 4,961 crore. However, Swiggy's losses widened to Rs 1,197 crore in the June quarter.
Meanwhile, Eternal's net profit dropped 90% to Rs 25 crore. This decrease in profitability could be attributed to the company's focus on expanding its quick commerce operations and investing in growth initiatives.
Both Zomato and Swiggy are doubling down on quick commerce to offset slower growth in food delivery. The strategy of raising the platform fee ahead of peak seasons and retaining the higher rate afterward has become a recurring practice. This approach aims to capitalise on the anticipated surge in demand during festive seasons while ensuring sustainable growth for the companies.
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