Is Swiggy Charging Higher Commissions From Restaurants? Charging Extra Delivery Fees From Customers?

Is Swiggy Charging Higher Commissions From Restaurants? Charging Extra Delivery Fees From Customers?
Is Swiggy Charging Higher Commissions From Restaurants? Charging Extra Delivery Fees From Customers?

As per the reports, the foodtech unicorn Swiggy plans to foray into newer avenues to reduce cash burn, it is continuously looking to boost revenue. 

How Did This Happen?

According to sources, Swiggy is progressively raising its commissions from restaurants in regions where its service is nearing maturity, while aggressively pushing partners to advertise on its platform, as the company shifts focus to monetize its core food ordering business, restaurateurs and others.

The Bangalore based company is raising its commissions from restaurants in regions where its services are in higher demand.

According to the reports, 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. 

What Other Changes Are In Store?

Apart from the increase in commission, the company has rigorously been pushing restaurants partners to advertise on its platform, the restaurant owner claimed.

Moreover, Swiggy has increased delivery fees it charges the customers as well in order to cut losses on a per delivery basis.

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 conformed by another source.

What Does Swiggy Say About These Changes?

While talking about this, Swiggy 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.

In a statement to ET, Swiggy said: “This is nothing but business as usual in a marketplace such as ours,”, adding, “Commissions at Swiggy are not based on the category or market maturity/geography. It is worked upon at an individual restaurant level and is in line with factors like average order value, delivery costs and other costs that are incurred,”

The foodtech claims that it charges restaurants at an individual level on factors such as average order value, delivery costs and among others, the report added.

How Is The Company Performing?

As per the reports, the Bengaluru-based Swiggy is currently at $3.3 Bn valuation, seems to dominate the market share both in revenue and online deliveries. 

The company said to have crossed 500 Mn delivery orders In October 2019, exceeding the target of 360 Mn a year set for the year.

According to the co-founder of Swiggy Sriharsha Majety, the company generates over 60% revenue in online food delivery, which is bigger than the rest of the players combined. 

The company believes that the need for capital will eventually decrease with online food delivery and cloud kitchen business reaching profitability.

Swiggy 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. 

Also, it has launched Swiggy Money Wallet in collaboration with ICICI Bank, which is expected to be available on the Swiggy app soon.

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