Image Source: Arabian Post
Food delivery major Swiggy has raised its platform fee to Rs 15 per order, marking the third increase in as many weeks. This latest hike is the steepest since the company introduced platform fees and comes as Swiggy aims to capitalize on the growing festive season demand while addressing widening financial losses. The platform fee, an additional charge levied over and above delivery fees, GST, and restaurant costs, fluctuates based on location and demand levels. With order volumes back on the rise, estimated at over 2 million per day, the increased fee translates into significantly higher daily revenue. This move by Swiggy also follows similar actions by its main competitor, Zomato, which has increased its platform fee to Rs 12 per order for the festive period.
Key Highlights and Context of the Fee Hike
Third Increase in Three Weeks: Swiggy increased its platform fee first to Rs 14 briefly on Independence Day, temporarily brought it down to Rs 12, and now has raised it again to Rs 15 per order. This rapid series of hikes reflects an agile pricing strategy responding to market demand and financial imperatives.
Revenue Impact: At current order volumes, the Rs 15 fee could generate about Rs 3 crore daily, up from Rs 2.4 crore when the fee was Rs 12. This could mean an incremental revenue boost of approximately Rs 54 crore per quarter and Rs 216 crore annually if the fee remains steady.
Historical Background: Platform fees for Swiggy started at Rs 2 in April 2023 and have climbed steadily. The fees have stayed mostly above Rs 10 since both Swiggy and Zomato tested higher charges around the previous year-end holiday season.
Fee Structure Details: The platform fee is charged in addition to other costs like delivery charges, GST, restaurant commission, and occasional added levies such as a rain fee. It is not uniform and is adjusted dynamically based on city, day, and demand conditions.
Financial and Strategic Considerations Behind the Hike
Improving Unit Economics: Swiggy’s hike in platform fees is a strategic move to strengthen unit economics amid rising demand during the festive season. The company is looking to boost overall profitability without impacting customer discounts or delivery partner payments significantly.
Loss Widening: Swiggy reported a net loss of Rs 1,197 crore in the April-June quarter of FY26, nearly doubling from Rs 611 crore the year before. Much of this loss is attributed to investments in Instamart, the firm's rapid commerce segment. Despite a 54 percent year-on-year revenue increase to Rs 4,961 crore, the company is under pressure to improve margins.
Competitive Pressure: Zomato, Swiggy’s main rival, has also raised its platform fee to Rs 12 per order during this festive period. At Zomato’s volume (2.3 to 2.5 million daily orders), this adjustment is similarly expected to add around Rs 3 crore in daily revenue.
Market and Consumer Impact
Consumer Cost: The recurrent fee hikes imply higher costs on every food order placed through Swiggy, which along with other surcharges like GST and delivery charges, make online food ordering more expensive.
Dynamic Pricing Model: The platform fee varies, often increased on high-demand days and in busy cities to optimize revenue without heavily denting order volumes. This tactic allows the company to balance customer retention and profitability.
Industry Trend: Both Swiggy and Zomato have incrementally tested and retained higher platform fees during peak demand periods, indicating a trend in the food delivery sector toward monetizing the surge in festive and high-volume ordering.
Summary
Swiggy’s recent platform fee increase to Rs 15 per order marks its third hike in just three weeks, reflecting a focused attempt to capitalize on the festive season demand surge and address widening financial losses. With over 2 million daily orders, the fee hike translates to substantial incremental revenue. Along with Zomato’s similar fee increases, this trend highlights a competitive and strategic move by India’s leading food delivery platforms to improve unit economics while navigating the challenges of scaling and profitability. Consumers can expect higher costs on food delivery orders, as these companies fine-tune their pricing models based on demand and market conditions.
Source: Moneycontrol, The Economic Times, Business Today, The Hindu Business Line, Hindustan Times
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