IPO-Bound Swiggy Shrugs Off Plans On Doubling Platform Fee In Near Term

Amid speculation that Swiggy may double its platform fee on food orders from INR 5 to INR 10 in the coming months to offset losses ahead of its planned initial public offering (IPO), the Bengaluru-based food delivery aggregator has denied the development, saying that it has no such plan in the future.

“We are always running small experiments to better understand the consumer’s choices. This was one such experiment, and we may or may not scale it up in the future if it doesn’t meet our goal of serving our users in the best way possible. We have been always looking for ways to make our platform more affordable, and our latest offering, Pockethero, is another example of that. Pockethero is designed for budget-conscious consumers, and we’re expanding it across the country right now,” a Swiggy spokesperson told Inc42.

According to a Moneycontrol report, the company is likely to double its platform fee on food orders from INR 5 to INR 10 in the coming months, a move that is seen as a strategic effort to reduce losses as it gears up for its upcoming IPO later this year.

Swiggy has started teasing the new fee on its app for select customers, the report said.

Last year, Swiggy started experimenting with platform fees. During the initial trial period, the company cautiously introduced a nominal platform fee of INR 2 on specific food orders, regardless of the cart size.

After observing that this additional fee did not significantly impact the volume of food orders, Swiggy expanded its approach. A few weeks later, the platform began implementing a uniform platform fee for all customers.

The foodtech giant has incrementally raised its platform fee to INR 5, but a percentage of customers still pay a reduced fee of INR 3.

The platform fee, which is charged in addition to the delivery fee, remains in effect for all customers, including those who are part of Swiggy’s loyalty program, Swiggy One.

Swiggy archrival Zomato has also recently increased the platform fee to INR 4 per order across key markets from INR 3, according to information on its app.

The two platforms are charging a platform fee beyond the delivery charge, which is waived for customers of their respective loyalty programmes.

This aligns with Swiggy’s quest for profitability, especially as the company gears up for its stock market debut in 2024. Swiggy’s IPO is anticipated to take place in mid-2024.

Founded in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, Rahul Jaimini, Swiggy has raised $3.6 Bn funding to date.

Last year, Swiggy’s cofounder and CEO Sriharsha Majety said its food delivery business achieved profitability as of March 2023. “As of March 2023, Swiggy’s food delivery business has turned profitable (After factoring in all corporate costs; excluding employee stock option costs).”

The company posted a consolidated loss of INR 3,629 Cr in FY22 and revenue of INR 5,704.9 Cr. Of this, INR 3,444.4 Cr came from the food delivery business.