To leverage the surge in demand expected during the festive season, Swiggy Ltd. and Eternal Ltd.’s Zomato have increased platform fees yet again. While Swiggy has raised its platform fees three times to ₹15/order inclusive of GST, Zomato has affected a 20% hike to ₹12/order, without GST. With nearly 20 lakh orders a day, Swiggy now stands to earn ₹3 crores daily just from platform fees, while the figure is more or less the same for Zomato.
What is a Platform fee?
A platform fee is added on top of the cost of items, delivery charges, restaurant charges, surge, packaging and GST and is mentioned in the breakup of a bill for a user. The platform fee helps cover operational and logistics costs, improves EBITDA margins and unit economics, as well as offset losses from quick commerce, which is cost intensive.
Interestingly, both Swiggy and Zomato are still facing cost pressures. In the quarter ended 30 June, Swiggy posted a loss that widened to ₹1,197 crore even as operating revenue increased 54% to ₹4,961 crore. Zomato’s profit fell 90% year-on-year to ₹25 crore, on the back of revenue that surged 70% to ₹7,167 crore.
This necessitates the need for additional revenue streams, like platform fees.
On Wednesday, Swiggy and Eternal shares rose 1.19% and 1.16%, respectively, even as the benchmark Sensex ended the day 0.51% higher.
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