Platform Fee Hike Sparks Debate: Boycott Zomato and Swiggy?

The recent increase in platform fees by Zomato and Swiggy raises the total cost of food orders, increasing the attraction of eating in. Concerns regarding fairness and openness are raised because neither corporation has provided a clear justification for this rise. Other meal delivery services, however, might continue to provide more reasonably priced selections, making them appealing substitutes. Customers can clarify that they disagree with the rise in charges by boycotting Zomato and Swiggy. This could force the companies to reevaluate their pricing policies.

Customers in Bengaluru & Delhi are being served an unpleasant pill by big food delivery companies Zomato and Swiggy

The platform costs for both companies have been raised by 20%, from Rs 5 to Rs 6 for each order. Customers who depend on these platforms for easy meal deliveries may bear an increased burden due to this decision, which will likely affect the overall cost of ordering food.

 The platform fee is only subject to this increase; delivery, GST, restaurant markups, and handling fees are omitted. But when you order food online, your total cost can increase slightly. These little price increases might add up for frequent customers, making ordering more expensive. Many consumers still find that having food delivered right to their house is a very convenient option. Other cities will soon see this increased platform cost implementation as well.

Why have Zomato and Swiggy increased the platform fee?

The platform fee is meant to assist food aggregators in cost containment and revenue generation. Zomato increased its platform fee to Rs 5 for each order in April, a 25 percent increase. To improve margins and turn a profit, Zomato raised its platform price from Rs 2 to Rs 3 in August of last year. With this platform charge, the food delivery platforms want to make between Rs. 1.25 and Rs. 1.5 crore a day.

Boost Revenue

By charging an extra fee, the businesses may be able to increase their revenue and possibly even their profit margins. With increased competition and a growing demand for food delivery services, this platform fee rise may help balance any financial strains and keep businesses operating.

Reduce Costs

The platform charge may be a technique for reducing the operating costs related to providing the delivery services. These expenses cover paying delivery staff, maintaining app infrastructure, and providing prompt customer support. Zomato and Swiggy may be trying to balance these operating expenses by increasing the platform fee, all without materially affecting the quality of their core services.

The rise in fees may also affect restaurants

This action may encourage customers to look into other meal delivery services that still need to increase their prices, which could cause the market's dynamics to change. Newer or smaller platforms may experience a rise in users as consumers look for more affordable options; this would enhance competition in the meal delivery market. The fee rise may also affect restaurants, who may need to modify their pricing policies to cover the higher expenses without losing customers. They could add more specials and discounts or gradually increase the menu costs to appeal to price-conscious customers. Over time, these modifications may impact the meal delivery industry's general cost and service arrangement.

Conclusion

A boycott can be simpler if you refrain from using Swiggy and Zomato. Explore other platforms and evaluate their features and costs before making a choice. But think about how a boycott might affect restaurants that depend significantly on these platforms for delivery; these businesses stand to lose. The meal delivery industry is a networked ecosystem. Thus, companies such as Zomato and Swiggy shouldn't raise prices whenever it suits them. This might upset the delicate balance and impact both customers and restaurants.

Read More

What is Zomato UPI? When will be available for New Users?