Swiggy Begins Charging Service Fees On Gross Order Value For Non-Metro Restaurants As Well

After metros, IPO-bound foodtech major Swiggy has now reportedly begun charging service fees on the gross order value for its restaurant partners in non-metro cities as well. 

With this, the service fee payable by restaurants will also be chargeable on goods and services tax (GST) and packaging charges. This effectively means that the Swiggy has hiked its commissions for its partners in non-metro cities too. 

Prior to this, the service fee was levied only on the net value for restaurants in smaller cities and towns. It is pertinent to note that restaurants in metro cities were already paying commissions on the gross order value.

As per a letter sent to restaurants and seen by Economic Times, the company said that the revision was brought in to bring in uniformity in the commission structure. Swiggy started rolling out the new charges starting August 14.

“Effective 14 August (Wednesday), we shall be charging service fee on the gross value of each order as defined under our merchant terms. This change is being implemented across the platform for all our partners to ensure uniformity in our commission structure. This change will marginally increase the service fee payable to us,” Swiggy reportedly said.

Citing sources, the publication said that the new changes will only be rolled out to 1,000 partners “as of now”. “The contracts are typically on an individual basis, but this latest change will be rolled out to around 1,000 partners — as of now,” a source reportedly added.

Meanwhile, a Swiggy spokesperson told the publication that the change in commission structure was only “intended for a small subset of partners”, adding that there are no “broad changes” to Swiggy’s commission structure. 

The spokesperson added, “The recent communication from Swiggy was intended for a small subset of partners, basis discussions, and is fairly routine as different partners have commercial arrangements based on their needs. We have multiple channels available for partners to discuss all issues with us”.

The company also said, “There are no broad changes to Swiggy’s commission structure for restaurant partners. Partners will continue to operate under the existing terms of their agreements”.

With this, Swiggy could be looking at bolstering its top line ahead of its much-awaited public listing. The foodtech major filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in April this year via the confidential route for a $1.2 Bn IPO.

The public issue will include fresh issue of shares worth up to INR 3,750.1 Cr (about $449 Mn) and an offer-for-sale component of up to INR 6,664 Cr (around $799 Mn), as per its regulatory filings.  

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