Zomato Hikes Platform Fee to ₹5 Per Order Amid Surging Profits

Zomato hikes platform fee to ₹5 per order, reports profit surge, and suspends intercity food delivery service, highlighting evolving dynamics in India's competitive food delivery market.

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Rafia Tasleem
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Zomato Hikes Platform Fee to ₹5 Per Order Amid Surging Profits

Zomato Hikes Platform Fee to ₹5 Per Order Amid Surging Profits

Zomato, India's leading food delivery platform, has once again increased its platform fee, raising it to ₹5 per order in major cities across the country. The latest hike, effective from April 20, 2024, marks the third increase in the platform fee since its introduction in August 2023 at ₹2 per order. The fee was subsequently raised to ₹3 in October and ₹4 in January before the most recent 25% increase.

The platform fee, charged by food delivery apps in addition to delivery charges, has become a significant revenue driver for Zomato. The company's closest rival, Swiggy, has also implemented similar platform fee hikes as both companies focus on enhancing profitability. Zomato's quick-commerce platform, Blinkit, also charges a handling fee of ₹2 per order.

The move comes as Zomato reports substantial profit growth in the third quarter of the 2023-24 fiscal year. The company posted a consolidated profit after tax of ₹138 crore, a remarkable turnaround from the loss of ₹347 crore in the same quarter the previous year. This surge in profitability is attributed to top-line growth and an increase in gross order value (GOV) across Zomato's food delivery and Blinkit businesses.

Why this matters: Zomato's platform fee hikes and impressive profit growth underscore the intensifying competition and evolving dynamics in India's food delivery market. As leading players like Zomato and Swiggy prioritize profitability, consumers may face higher costs for the convenience of online food ordering. The long-term impact of these changes on the industry and consumer behavior remains to be seen.

In a related development, Zomato has suspended its intercity food delivery service, 'Intercity Legends,' which provided next-day delivery from certain cities. The suspension is attributed to challenges and legal issues faced by the service. Despite this setback, Zomato continues to innovate, recently launching an all-electric 'large order fleet' to cater to the growing demand for large orders for gatherings, parties, and events.

Zomato's stock has surged nearly 260% since last April, reflecting investor confidence in the company's growth prospects and profitability. However, the company recently received a GST demand and penalty order worth ₹11.81 crore for the July 2017-March 2021 period, highlighting the <a href="https://smefutures.com/zomato-increase-platform-fee-to-rs-5-suspends-intercity-food-delivery/" target="_blank" rel="noopener noreferrer

Key Takeaways

  • Zomato hikes platform fee to ₹5 per order, 3rd increase since Aug 2023.
  • Platform fee, a significant revenue driver for Zomato and Swiggy.
  • Zomato reports ₹138 cr profit in Q3 FY24, up from ₹347 cr loss.
  • Zomato suspends intercity food delivery, launches all-electric 'large order fleet'.
  • Zomato stock surges 260% since last April, but faces GST demand and penalty.