Zepto, a quick-commerce firm, has been experimenting with platform fees alongside handling charges and delivery fees in order to enhance its profitability.
The company is implementing a platform fee of INR 2 per order, in addition to handling charges that can vary between INR 5-20 depending on factors such as order size, location, and time of day. This sets it apart from competing quick-commerce platforms like Zomato-owned Blinkit and Swiggy Instamart, which solely charge handling fees.
Conversely, Zomato and Swiggy‘s primary food delivery services impose platform fees. These fees, along with advertising opportunities, serve as revenue-boosting avenues for food delivery companies. However, increasing commissions from restaurant partners often encounter resistance from the latter.
In January, Swiggy hinted at a platform fee of INR 10 for select users, significantly higher than the INR 3 charged to most users currently. On New Year’s Eve, Zomato temporarily raised the platform fee to as much as INR 9 per order in specific markets, compared to its usual INR 3-4 per order.
Continue Exploring: Quick commerce platforms Blinkit and Zepto expand into e-commerce, targeting fashion, beauty, electronics, and more
Zepto is presently the only standalone quick commerce firm operating in India.
“We don’t believe in being over dependent on delivery fees to be profitable. We believe in core operating efficiency and cost reduction to be profitable. We are on track to achieve the Ebitda positive milestone even with much lower delivery fees,” a spokesperson for the firm said, without giving details on the plans around platform fees.
In addition to platform, delivery, and handling fees, Zepto also imposes a “small cart” fee for orders under INR 100 and implements a surge fee during peak demand periods.
On February 19, the company launched a membership program called Zepto Pass. It provides free delivery for orders exceeding INR 99 and discounts for orders above INR 399 for the majority of customers. Initially priced between INR 149 and INR 299 per month, it is currently being sold at a heavily discounted rate of INR 19.
Continue Exploring: Zepto launches Zepto Pass membership program for all users, offering exclusive benefits
In a post on X (formerly Twitter), cofounder and CEO Aadit Palicha announced that Zepto reached 1 million Pass subscribers within just one week of its launch.
Continue Exploring: Zepto Pass hits 1 Million subscribers within a week of launch
In a statement, brokerage firm JM Financial highlighted that customer fees such as platform and handling fees were a key factor driving the “enhanced profitability” of quick commerce firms.
Palicha had previously mentioned that Zepto aims to achieve profitability at the earnings before interest, taxes, depreciation, and amortization (EBITDA) level within the next two and a half quarters. He also stated that Zepto’s monthly cash burn remained in the single-digit million dollars range and confirmed that the firm had surpassed $1 billion in annualized gross merchandise value.
