Zomato, the foodtech giant, has raised its platform fee by 25% to INR 5 per order and suspended its intercity delivery service, Intercity Legends.
Zomato has increased the platform fee in its major markets, which include the National Capital Region, Bengaluru, Mumbai, Hyderabad, and Lucknow.
On Monday (April 22), Zomato’s shares commenced trading at INR 193.00, marking a 2% increase from its prior close at INR 189.20.
According to reports, even a modest INR 1 increase in Zomato’s fees for its sizable customer base, handling between 2-2.2 million orders per day, could lead to a substantial earnings boost for the company within a quarter.
At the start of the year, Zomato increased its platform fee from INR 3 to INR 4 per order in key markets starting January 1st.
Continue Exploring: Zomato raises platform fee to INR 4 per order in major cities
Meanwhile, Zomato has temporarily halted its interstate delivery service, interstate Legends. The intercity area of the Zomato app presently displays the phrase “Closed now.” We will be back shortly.” It also includes the note: “Enhancements are currently underway. Please stay tuned; we’ll be back to serve you soon.”
Launched initially in 2022, the service enabled food delivery from specific restaurants in chosen cities to a limited range of urban areas. However, Zomato modified the model last year, allowing the delivery of pre-stocked items from various cities within a shorter delivery timeframe.
In 2023, Zomato initiated various experiments, one of which involved implementing a platform fee on orders starting in August. The fee began at INR 2 and later rose to INR 3 across major markets.
Continue Exploring: Zomato extends platform fee to wider user base, implements INR 3 charge in select cities
Swiggy, Zomato’s main competitor, also introduced a fee of INR 2, which was subsequently raised to INR 3.
Both platforms are implementing a platform fee in addition to the delivery charge, although this fee is waived for customers who are part of their loyalty programs. However, it’s important to mention that the platform fee still applies to members of Zomato Gold and Swiggy One.
With both platforms prioritizing profitability, Zomato has experienced a significant turnaround in its profits over the past three quarters.
In the December quarter (Q3) of the financial year 2023-24 (FY24), Zomato posted a consolidated profit after tax (PAT) of INR 138 Cr. The company’s operating revenue surged to INR 3,288 Cr in Q3 FY24 from INR 2,848 Cr in Q2 FY24.
Continue Exploring: Zomato reports third consecutive profitable quarter with INR 138 Cr PAT in Q3 FY24
Recently, Zomato unveiled an all-electric “large order fleet” aimed at delivering substantial orders for up to 50 people in one go.
Zomato’s founder and CEO, Deepinder Goyal, expressed that the new vehicles would effectively address the challenges faced by customers when placing large orders.
Continue Exploring: Zomato launches all-electric ‘large order fleet’ for events and gatherings