Winning Bizness Desk
Mumbai.Ordering food from Zomato has become costlier for customers choosing cash on delivery, with the platform adding a separate fee for paying in cash at the time of delivery.
Customers selecting the cash-on-delivery option will now have to pay an additional Rs 5 on their food orders. The new charge will appear separately in the bill summary under the name ‘Pay on Delivery Fee’.
The exact amount, however, appears to vary for some users. While a Rs 5 fee is being charged in some cases, bills seen by other users show charges ranging from Rs 7 to Rs 20.
Digital payments remain outside new fee
Customers paying through digital modes will not have to bear this additional charge. The exemption applies to common online payment methods, including:
- UPI payments
- Credit and debit cards
- Net banking
The new fee is separate from the platform fee, restaurant packaging charges, delivery charges and GST. This means customers opting for cash payment could now see an additional cost over and above the other charges already included in their order.
Zomato faces pressure to improve profitability
The move comes as food delivery and quick-commerce companies face growing competition and increasing pressure to improve their profitability.
Zomato handles around 23 lakh to 25 lakh food orders every day. If the company charges an additional Rs 5 on every order, the extra revenue could theoretically reach up to Rs 1.25 crore a day.
Not every customer chooses cash on delivery, so the actual additional revenue would depend on the share of orders paid in cash. Even so, the new fee could potentially add hundreds of crores of rupees to Zomato’s annual earnings.
Platform fee has risen sharply since 2023
The addition of small charges to food orders is not new. Zomato and Swiggy started charging a platform fee of just Rs 2 per order in April 2023.
The platform fee has since increased to Rs 14.99 per order, with 18% GST applicable on it. Although the increase from Rs 2 to nearly Rs 15 may appear small on an individual order, such charges can generate substantial revenue when applied across millions of transactions.
Food delivery and e-commerce companies together earn an estimated Rs 3,500 crore to Rs 4,000 crore annually through such small charges.
Competition intensifies across food delivery market
Zomato’s latest move comes at a time when competition in India’s food delivery and quick-commerce sectors is intensifying.
Rapido is entering the market with its ‘Only’ platform, while Flipkart has launched its new ‘Eat In’ service. At the same time, newer startups such as Swish have recently raised fresh funding.
The developments are increasing pressure on established players such as Zomato and Swiggy to find new revenue streams and strengthen profitability. Swiggy, however, has not introduced a similar cash-on-delivery fee so far.
