SUMMARY
A Zomato spokesperson said that the levy of platform fee is in an experiment phase right now and the company may or may not scale it
The ‘flat fee’ will be chargeable irrespective of the cart value, and will enable the company to enhance and develop features on its platform
In a post-earnings conference call earlier this week, CFO Akshant Goyal said the company would implement the platform fee when it thinks it is the ‘right thing for the business’
Following Swiggy’s suit, foodtech major zomato
has also begun levying a platform fee of INR 2 per order for select users on its platform.
In a statement sent to Inc42, a Zomato spokesperson confirmed the development. “This is in an experiment phase right now, and we may or may not scale,” the spokesperson said.
As per the foodtech major, the ‘flat fee’ will be chargeable irrespective of the cart value and will enable the company to enhance features on its platform.
Responding to a customer’s post about platform fee on X (formerly Twitter), Zomato said, “… the platform fee is a flat fee to pay for convenience at your doorstep. It helps us maintain, develop and enhance features to guarantee you smooth and enjoyable experiences.”
The platform fee will not only be levied on regular Zomato users but also on the customers of its loyalty programme Zomato Gold. However, it appears so far that the new changes have not been rolled out on Zomato’s quick-commerce platform Blinkit.
With this, Zomato has taken a leaf out of rival Swiggy’s playbook which also began levying a platform fee of INR 2 per order beginning April this year.
However, the move to levy the fee came as a surprise for many as Zomato piloted the fee nearly four months after Swiggy set the ball rolling in this aspect. The new charges could largely be attributed to Zomato’s efforts to create an additional source of income.
As per a report, Zomato clocks anywhere between 1.3-1.5 Mn orders a day. While many users may not feel the pinch of INR 2 per order, the fee could help the foodtech mint additional revenue in excess of INR 26 Lakh per day, which roughly translates to INR 94 Cr a year.
Earlier this week, Zomato reported its maiden profitable quarter, posting a profit after tax (PAT) of INR 2 Cr in the first quarter (Q1) of the financial year 2023-24 (FY24). The company also expressed confidence about sustaining its profitability, and the platform fee can help it in this endeavour.
While Zomato CFO Akshant Goyal, in a letter to shareholders, expressed confidence that the company was well-placed to remain profitable going forward, he steered clear of answering a question about implementing such a fee during the post-earnings call later on August 3.
“… we’ll take a call (on implementing platform fee) if we think it’s the right thing for the business. At this point, we haven’t done that. There’s no platform fee on our platform,” Akshant Goyal reportedly said.
The new platform fee adds to a slew of offerings piloted by Zomato in the recent past. While the foodtech major conducted a trial of its UPI feature earlier this year, it paused user onboarding on its platform last month.
It also launched a multi-restaurant feature in June and was even experimenting with generative artificial intelligence (AI) across its multiple platforms. With profitability at stake now, it remains to be seen if the platform fee eats into Zomato’s order volume or witnesses a full-scale rollout.
