Swiggy has started charging a higher commission in high-density regions
Resturants are charged 18-23% of the total value at the time of renewal compared to 12-18% during the initial deal
The company generates over 60% revenue from online food delivery, which is bigger than the rest of the players combined
As the foodtech unicorn Swiggy plans to foray into newer avenues to reduce cash burn, it is continuously looking to boost revenue. Now it’s raising its commissions from restaurants in regions where its services are in higher demand.
In an ET report, one of the fast-food chain owners whose restaurant is listed exclusively on Swiggy claimed that the company has started charging a higher commission for new and existing restaurants in the high-demand regions. The increase in commission also comes after the company has rigorously been pushing restaurants partners to advertise on its platform, the restaurant owner claimed.
Also, in order to cut losses on a per delivery basis, Swiggy has increased delivery fees it charges the customers as well, he added.
Another source claimed that Swiggy partners with restaurants on a 12 to 18-month contract and as the contracts come up for renewal, it raises the charges up to 18-23% of the total value from 12-18% initial deal.
Swiggy, on the other hand, said that this is nothing but business as usual and denied any unusual increase in commissions for any specific restaurant partners based on market maturity or region. It claims that it charges restaurants at an individual level on factors such as average order value, delivery costs and among others, the report added.
Swiggy Craves For More
Bengaluru-based Swiggy which is currently at $3.3 Bn valuation, seems to dominate the market share both in revenue and online deliveries. In October 2019, the company said to have crossed 500 Mn delivery orders, exceeding the target of 360 Mn a year set for the year.
Swiggy said it crossed 500 million delivery orders in October, exceeding the target of 360 million a year set for the year.
Cofounder of Swiggy Sriharsha Majety had earlier said that the company generates over 60% revenue in online food delivery, which is bigger than the rest of the players combined. With online food delivery and cloud kitchen business reaching profitability, the company believes that the need for capital will eventually decrease.
It has added various features and services like Swiggy Pods, Swiggy Daily, Swiggy POP, Swiggy Stores and Swiggy Go to carve a niche in the foodtech space. Recently, the company also launched Swiggy Money Wallet in collaboration with ICICI Bank, which is expected to be available on the Swiggy app soon.
Updated: January 3, 2020 11:15
The updated version of the article states that Swiggy crossed 500 million delivery orders in October, exceeding the target of 360 million a year set for the year.
As per Swiggy’s request, the restaurant owner’s and source’s viewpoints were changed from “said” to “claimed”
