Why Zomato Wants You to Pay Rs 4 for Each Order?

By Consultants Review Team Tuesday, 02 January 2024

Zomato, the food delivery company, has increased its necessary platform fee from Rs 3 to Rs 4 in its core countries. The new cost, which will be levied to consumers, went into effect on January 1. Zomato introduced a Rs 2 platform fee in August of last year to increase company profitability. It went up to Rs 3 before doing it again.

A platform price increase is one of many ways for organizations like Zomato to enhance profitability, which also includes ad revenue, delivery charges, and more commission from restaurants.

This increase is only effective in 33% of the cities. Swiggy, Zomato's competitor, implemented a similar Rs 2 fee last year, which was eventually increased to Rs 3. All clients, including Zomato Gold, are subject to the new platform fee.

When compared to prior years, Zomato and its instant commerce platform Blinkit witnessed the highest-ever orders and bookings on New Year's Eve. "On NYE 23, we delivered nearly as many orders as we did on NYE 15, 16, 17, 18, 19, 20 combined." "I'm looking forward to the future!" Deepinder Goyal, the founder and CEO of Zomato, made a post on X.

According to Albinder Dhindsa, CEO of Blinkit, they exceeded the entire amount of orders they received on New Year's Eve 2022 in the evening just. "We've already hit highest-ever orders in a day, OPM (orders per minute), soft drinks and tonic water sold in a day, chips sold in a day, tips given to riders in a day (thank you India)," he said.

How does the platform fee benefit Zomato?

"It's a small price to pay to improve our long-term economic viability." "We make every effort to keep our service affordable for our customers at all times," said Zomato's chief financial officer, Akshant Goyal, when reporting the company's Q2FY24 results to shareholders.

Zomato attributed an increase in the percentage of what it makes (take rate) on each meal delivery order to the platform charge in its July-September statistics. According to Jefferies, Zomato's take rate in the September quarter of FY24 was 24.1%, up 28 basis points from the previous year and 32 basis points from the previous three-month period. CLSA, which has a 'buy' call on the company with a target price of Rs 168 per share, said in a note that the 33% platform fee increase will balance the impact of GST on delivery rates.


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