Swiggy, a food delivery giant backed by Prosus, has started charging a platform fee of Rs 2 per order to all its users to control its costs. The additional charges are being levied only on food orders and not on quick-commerce or Instamart orders. 

The platform fee is different from the handling fee levied on Instamart orders, irrespective of whether they are Swiggy One customers or not. While Rs 2 may seem small, it would create a large enough corpus for Swiggy to reinvest back into its business as it delivers over 1.5 million orders each day. The fee is likely to be extended to other regions.

Swiggy’s move comes after a slowdown in the delivery business. Swiggy’s CEO (chief executive officer) Sriharsha Majety said that the company was no exception to the slowdown. The growth rate for food delivery has slowed down versus projections. The slowdown has also been seen across the country but more so in the top eight cities.

Swiggy's rival Zomato has not introduced any platform fees yet. Swiggy's introduction of additional fees is likely to help it lower its cash burn, which is a lot more than what Zomato was burning. In the fiscal year 2022 (FY2022), Swiggy burnt around Rs 3,900 crore, compared with Zomato’s cash burn of Rs 700 crore. Despite that, Zomato had more market share. In FY23, Zomato's market share reached 56 per cent, while Swiggy enjoyed the rest 44 per cent. By the end of the current fiscal, Zomato’s market share would likely increase to 57 per cent, while Swiggy’s would reduce to 43 per cent.

In terms of revenues, Swiggy was larger at around Rs 5,700 crore compared with Zomato’s revenue of over Rs 4,100 crore. The introduction of the additional fee will likely help Swiggy control costs, improve platform performance and app features, and enhance app experience.