Food delivery major Zomato has hiked its mandatory platform fee from Rs 3 to Rs 4 in its key markets.
The new fee, which will be charged from users, rolled in from January 1. In August last year, Zomato had put in Rs 2 platform fee in a bid to improve its margins. It increased it to Rs 3 before doing it again now.
For firms such as Zomato, a platform fee hike is one of the many ways to improve profitability, which also includes apart from ad revenue, delivery charges, higher commission from restaurants.
This hike is effective only in 33 percent of the cities. Swiggy, Zomato’s rival, had also introduced a similar Rs 2 fee last year, which was later hiked to Rs 3.
The new platform fee applies to all customers, including Zomato Gold.
Zomato and its quick commerce platform Blinkit saw highest-ever orders and bookings on the New Year’s Eve, compared to previous years. “We have delivered almost as many orders on NYE 23 as we did on NYE 15, 16, 17, 18, 19, 20 combined. Excited about the future!” Zomato Founder and CEO Deepinder Goyal posted on X.
Albinder Dhindsa, CEO, Blinkit said they crossed the total number of orders they did on NYE 2022 in the evening only. “We’ve already hit highest-ever orders in a day, OPM (orders per minute), soft drinks and tonic water sold in a day, chips sold in a day, tips given to riders in a day (thank you India),” Dhindsa informed.
How does platform fee help Zomato?
“It is a small fee to make our economics better and viable in the long run. We make sure we keep our service affordable for our customers at all times,” Zomato’s chief financial officer, Akshant Goyal, told shareholders while announcing the company’s Q2FY24 results.
In its July-September results, Zomato attributed an improvement in the percentage of what it makes (take rate) on each food delivery order to the platform fee. Jefferies in a note said Zomato’s take rate in the September quarter of FY24 was 24.1%, an improvement of 28 basis points from a year earlier and 32 basis points from last three-month period.
CLSA, which has a has a ‘buy’ call on the stock with a target price of Rs 168 per share, in a note said the 33 percent platform fee hike would partially offset the impact of GST on delivery charges.