Why is Zomato charging Rs 2 as a platform fee on all its orders?

Food delivery aggregator Zomato has started charging a platform fee of Rs 2 on every order, four months after its rival Swiggy did the same. Zomato has rolled out the policy for certain orders in some markets only. The “small fee” has been introduced to help “us pay the bills so that we can keep Zomato running,” a pop-up on the food delivery app stated.

The platform fee has not been introduced on Zomato’s quick commerce service Blinkit. A Zomato spokesperson claimed that the decision was in an experimental phase. "This is in an experiment phase right now, and we may or may not scale."

Zomato’s rationale behind its platform fee

Zomato declared its first-ever consolidated profit of Rs 2 crore in the April-June quarter this year. In a regulatory filing, Zomato stated that it had posted a net loss of Rs 186 crore in the corresponding period last fiscal. In the first quarter of the present fiscal, the consolidated revenue from operations was Rs 2,416 crore as against Rs 1,414 crore a year-ago. Total expenses jumped from Rs 1,768 crore in the corresponding quarter a year ago to Rs 2,612 crore.

It seems that Zomato is looking to explore new sources of revenue with the introduction of a platform fee.

Why did Swiggy introduce a platform fee of Rs 2 on all its orders?

In April, Swiggy introduced a platform fee. The charge is levied irrespective of the number of items in the cart. The company’s CEO and co-founder Sriharsha Majety attributed the move to a slowdown in the delivery business. According to a statement by a Swiggy spokesperson, "The platform fee is a nominal flat fee charged on food orders. This fee helps us operate and improve our platform and enhance app features to deliver a seamless app experience.”   

The company announced that the additional charge was valid only on food orders and not on Instamart deliveries.

The move will make deliveries costlier for customers. Food delivery apps like Zomato and Swiggy charge 22 to 28 per cent commission on food orders from restaurants. After Swiggy CEO Sriharsha Majety’s announcement in May that the company had turned profitable, Zomato may have been under pressure to try out the platform fee and increase its revenue.