Swiggy has recently announced a platform fee of INR 2 per order for its food delivery service in Bengaluru and Hyderabad. The fee applies to all orders, regardless of the cart value, and aims to boost Swiggy’s profitability by helping it operate and enhance its platform features.
The company’s decision comes at a time when Swiggy has been struggling with mounting losses, with net losses more than doubling to INR 3,628.9 Cr in FY22. To cut costs and revisit profitability goals, Swiggy announced a restructuring exercise earlier this year that would result in 380 job cuts.
Despite offering heavy discounts to consumers, Swiggy has been fast losing market share to its competitor Zomato, which has been expanding its presence in India’s foodtech market. According to a Jefferies report from last year, Swiggy’s market share grew 40% while Zomato’s growth was 55% during the first half of FY23. Zomato also started regaining market share from Swiggy after relaunching its loyalty program, Zomato Gold, in January.
Swiggy’s recent move to charge a platform fee might affect its market share and bottom line as the competition in the foodtech space heats up. Invesco reportedly marked down Swiggy’s valuation by more than 25% to $8 Bn earlier this month, down from $10.7 Bn in the previous quarter. Swiggy also launched a new initiative last month, Swiggy Launchpad, to enable new restaurants to sign up with Swiggy and drive the growth of its platform.
As Swiggy navigates through the challenges of the Indian foodtech market, it remains to be seen how it will adapt to changing consumer demands and behavior while ensuring its long-term sustainability and profitability.