Zomato Raises Platform Fee to INR 4 per Order in Key Cities

• ByStartupStory     |    January 2, 2024

Zomato has raised the platform fee it charges users for food delivery from Rs 3 to Rs 4 per order in its key markets, marking a 33% increase effective January 1, as per information available on the company’s app and sources familiar with the matter.

On New Year’s Eve, the Gurugram-based company had temporarily increased the fee to as high as Rs 9 per order in certain markets. Zomato’s orders surged to an all-time high on December 31, surpassing the combined number of orders it received over the past six years for New Year’s Eve (2015-2020), according to CEO Deepinder Goyal’s post on the microblogging site X (formerly Twitter).

Zomato began imposing a flat platform fee in August 2023, starting at Rs 2 per order and later raised to Rs 3 in most major markets. A Zomato spokesperson commented on the fee hike, stating, “These are business calls which we take basis various factors from time to time,” but did not elaborate further.

Zomato’s competitor Swiggy, based in Bengaluru, also introduced a platform fee last year, initially at Rs 2 per order and later increased to Rs 3. Zomato applies the platform fee in addition to a delivery charge, which is waived for customers of its loyalty program, Zomato Gold. However, the platform fee is applicable to Zomato Gold members as well.

Zomato-owned quick-commerce platform Blinkit imposes a handling charge of Rs 2 on every order. In its July-September quarterly results, Zomato attributed the improvement in its take rate (the percentage of what the company makes on every order) for food delivery to the introduction of the platform fee.

According to a research note by Jefferies in November, Zomato’s take rate in the September quarter of fiscal 2024 improved to 24.1%, up 28 basis points from a year earlier and 32 basis points from the previous quarter. The report estimated Zomato delivered around 190 million orders during the quarter, a 14% increase from the same period last year.

Zomato reported its second consecutive quarterly net profit for the three-month period ended September 30, with a profit after tax of Rs 36 crore. In the April-June quarter, it had reported a net profit of Rs 2 crore. According to a UBS report cited by ET on October 10, customers of food-delivery and quick-commerce platforms were broadly indifferent to marginal cost increases, suggesting that non-delivery fees could improve revenue and unit economics for the companies.

ET previously reported on September 2 that several consumer-focused internet platforms, including Uber, BigBasket’s quick-commerce vertical BB Now, and Zepto, were imposing a per-order or per-booking fee to enhance their unit economics.

On Monday, shares of Zomato ended trading 0.7% higher at Rs 124.50 on the BSE.

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