Contrary to speculation suggesting that Swiggy might increase its platform fee for food orders from INR 5 to INR 10 in the upcoming months to counterbalance losses before its scheduled initial public offering (IPO), the Bengaluru-headquartered food delivery aggregator has refuted these claims, asserting that there are no such plans in its future strategies.
“We are always running small experiments to better understand the consumer’s choices. This was one such experiment, and we may or may not scale it up in the future if it doesn’t meet our goal of serving our users in the best way possible. We have been always looking for ways to make our platform more affordable, and our latest offering, Pockethero, is another example of that. Pockethero is designed for budget-conscious consumers, and we’re expanding it across the country right now,” stated a spokesperson from Swiggy.
Continue Exploring: Swiggy rolls out the innovative Pockethero feature for budget-conscious food lovers
According to a Moneycontrol report, the company is likely to double its platform fee on food orders from INR 5 to INR 10 in the coming months. This move is seen as a strategic effort to reduce losses as it gears up for its upcoming IPO later this year.
Swiggy has begun hinting at the introduction of a new fee for select customers on its app, as mentioned in the report.
Last year, Swiggy started experimenting with platform fees. During the initial trial period, the company cautiously introduced a nominal platform fee of INR 2 on specific food orders, regardless of the cart size.
Continue Exploring: Swiggy implements ‘platform fee’ on all orders, users to bear the cost
Having noted that the extra fee had minimal impact on the volume of food orders, Swiggy broadened its approach. Several weeks later, the platform started implementing a uniform platform fee for all customers.
The foodtech giant has gradually increased its platform fee to INR 5, although a percentage of customers continues to pay a discounted fee of INR 3.
Continue Exploring: Swiggy increases platform fee to INR 3 per order to boost profitability ahead of IPO in 2024
The platform fee, applied alongside the delivery fee, is applicable to all customers, including those enrolled in Swiggy’s loyalty program, Swiggy One.
Swiggy’s rival, Zomato, has recently increased the platform fee to INR 4 per order across key markets from INR 3, as indicated on its app.
Continue Exploring: Zomato raises platform fee to INR 4 per order in major cities
Both platforms impose a platform fee in addition to the delivery charge, but this fee is waived for customers enrolled in their respective loyalty programs.
This is consistent with Swiggy’s pursuit of profitability, particularly as the company prepares for its stock market debut in 2024. The anticipated timeline for Swiggy’s IPO is mid-2024.
Continue Exploring: Swiggy may file IPO by fiscal year end, plans to raise capital with combination of offer-for-sale and new issue; Prosus contemplates stake reduction
Established in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, and Rahul Jaimini, Swiggy has secured a total funding of $3.6 billion so far.
Last year, Swiggy’s co-founder and CEO Sriharsha Majety announced that the company’s food delivery business had achieved profitability as of March 2023. “As of March 2023, Swiggy’s food delivery business has turned profitable (After factoring in all corporate costs; excluding employee stock option costs).”
In FY22, the company reported a consolidated loss of INR 3,629 crore and generated revenue of INR 5,704.9 crore. Notably, INR 3,444.4 crore of the total revenue originated from the food delivery business.
