The well-known meal delivery service app Zomato has made the decision to raise its client costs in key Indian cities. Cities like Delhi-NCR, Bengaluru, Mumbai, Hyderabad and Lucknow see a substantial increase by 25%. After a significant increase to Rs 2 in August 2023, Rs 3 in October, and Rs 4 in January 2024, the platform cost per order now stands at Rs 5. With the help of its enormous daily order volume, Zomato hopes to increase profitability with this calculated step that will support its earnings.
Fee Hike Dynamics
Different from the delivery price, the platform fee is a one-time cost that is added to every order. Remarkably, Zomato Gold members are subject to this charge even though they receive free delivery and discounts via the loyalty programme. Zomato has been gradually raising these fees in recent months in an attempt to predict the overall effect on company earnings.
Market Environment
Swiggy, Zomato’s primary rival, has a similar Rs 5 platform charge structure. But according to sources, Swiggy has experimented with increased costs, showing Rs 10 fees to a subset of consumers. This demonstrates how competitive the meal delivery industry is and how important price tactics are to attracting and keeping new customers.
Update on Legends Service
Since its start in 2022, Zomato’s interstate delivery service, Legends, had a substantial evolution. Prior to switching to pre-stocked products for quicker delivery, the service had difficulties including legal problems. Extended service plans that were supposed to include longer-distance delivery inside cities and overseas possibilities have been put on hold for the time being.
Challenges for Zomato
Following the troubled rollout of Legends, Zomato witnessed the resignation of its intercity delivery head and is currently embroiled in customer litigation regarding advertised features. These setbacks underscore the challenges inherent in innovation within the competitive delivery landscape.