Listed food delivery platform Zomato has raised the platform fee to INR 4 per order in key markets, as indicated on its app.
The revised rates came into effect on January 1st.
As per information cited in an ET report, platform fees were temporarily increased to as much as INR 9 per order in specific markets on New Year’s Eve.
“These are business calls which we take basis various factors from time to time,” a Zomato spokesperson was cited by ET as saying on the platform fee hike.
Coincidentally, on Sunday (December 31), Zomato witnessed its order volume surge to record-breaking levels during New Year’s Eve. Speaking to X, CEO Deepinder Goyal mentioned that the figure surpassed the cumulative number of orders the food delivery platform had recorded for New Year’s Eve in the previous six years.
Zomato introduced a platform fee for orders on its platform in August last year, starting at INR 2 and later increasing to INR 3 across major markets. Swiggy, Zomato’s main competitor, also initiated a fee of INR 2, which was subsequently raised to INR 3.
Read Other Articles: Zomato extends platform fee to wider user base, implements INR 3 charge in select cities
Both platforms impose a platform fee in addition to the delivery charge, although it is waived for customers enrolled in their respective loyalty programmes. Nevertheless, the platform fee is applicable to Zomato Gold and Swiggy One members.
Incidentally, Zomato’s quick commerce arm Blinkit also levies an INR 2 platform fee per order.
Platform Fee’s Role in Zomato’s Profitability
Although it may not be well-received by users, platform fees have contributed to the enhanced revenues of food delivery startups. For example, in its quarterly results from July to September, Zomato credited the increase in the percentage of its earnings (referred to as take rate) per food delivery order to the platform fee.
As per a research note by Jefferies in November, Zomato’s take rate in the September quarter of FY24 stood at 24.1%, showing an improvement of 28 basis points (0.28 percentage points) compared to the previous year and 32 basis points from the preceding three-month period.
Read Other Articles: Zomato’s platform fee hike expected to bolster customer take rate and contribution margin: Kotak Institutional Equities
The platform fee is increasingly seen as a key factor in Zomato’s turnaround, leading to profitability in the last two quarters. Zomato recorded a profit after tax of INR 36 Cr for the quarter ending September 30, 2023. In the April-June quarter, it had posted a net profit of INR 2 Cr.
The shares of the foodtech giant concluded trading 0.7% higher at INR 124.50 on the BSE on Monday (January 1).