In an effort to reduce costs, food tech company Swiggy has started charging all users a “platform fee” of Rs 2 each order, regardless of the amount of the basket. The extra fees, which were first implemented for users in cities like Bengaluru and Hyderabad, are currently solely applied to food orders and have not yet been implemented on quick-commerce or Instamart orders.
According to reports, Swiggy has not yet implemented these fees in important cities like Delhi and Mumbai. Only for food delivery is there a platform cost. Whether or not they are Swiggy One clients, it differs from the handling fee assessed on Instamart orders.
Even though Rs 2 might seem insignificant, experts said it would generate a sizable enough corpus for Swiggy to reinvest back into its company as it currently delivers over 1.5 million orders daily. The tax, which went into effect gradually over the past week, is probably going to be expanded to other areas. That is especially useful for the company because it has accelerated its timelines for becoming profitable as investors continue to tighten their purse strings.
According to reports, the primary reason behind the move is the slowdown in the delivery business. “The company was no exception,” said Swiggy’s chief executive and co-founder Sriharsha Majety in an email to employees which mentioned the company slashing 380 jobs.
“The growth rate for food delivery has slowed down versus our projections (along with many peer companies globally)….While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term,” the email read.
Swiggy’s financial burn, which “is a lot more than” what Zomato was burning, will probably be reduced by the addition of new fees. Swiggy burned about Rs 3,900 crore in cash during fiscal year (FY) 2022, while Zomato burned Rs 700 crore. However, the latter had a larger market share.