Best Fast Dropshipping Service & Business India

Quick commerce firm Zepto has been experimenting with platform fees in addition to handling charges and delivery fees as it looks to improve profitability.

The firm is charging a platform fee of Rs 2 per order, over handling charges that can range between Rs 5-20 depending on factors like order size, location and time of the day. This is different from rival quick commerce platforms like Zomato-owned Blinkit and Swiggy Instamart, who only charge handling fees.

On the other hand, the core food delivery arms of Zomato and Swiggy do charge platform fees. Such fees and avenues like advertising help food delivery firms boost earnings, as increasing commissions from restaurant partners often results in a push back from the latter.

In January, Swiggy teased a platform fee of Rs 10 to select users, sharply higher than the Rs 3 it currently charges most users. On New Year’s Eve, Zomato temporarily increased the platform fee to as high as Rs 9 per order in certain markets, compared to Rs 3-4 per order it usually charges.

Zepto is currently the only standalone quick commerce firm in India. “We don’t believe in being over dependent on delivery fees to be profitable. We believe in core operating efficiency and cost reduction to be profitable. We are on track to achieve the Ebitda positive milestone even with much lower delivery fees,” a spokesperson for the firm said, without giving details on the plans around platform fees.

Besides platform, delivery and handling fees, Zepto also charges a “small cart” fee when the items ordered cost under Rs 100, and a surge fee during times of higher demand.

On February 19, the firm introduced a membership programme called Zepto Pass which offers free delivery for orders over Rs 99 and discounts for orders above Rs 399 for most customers. The firm priced the offering between Rs 149 and Rs 299 per month but is currently selling it for a heavily discounted Rs 19.

In a post on X (formerly Twitter), cofounder and chief executive Aadit Palicha said Zepto hit 1 million Pass subscribers within one week of launch.

In a note, brokerage JM Financial said customer fees like platform and handling fees were a “driver” of “improving profitability” for quick commerce firms.

Zepto is now looking to turn profitable at earnings before interest, taxes, depreciation and amortisation (Ebitda) level in the next two and a half quarters, Palicha had told ET in an earlier interaction. He further claimed that Zepto’s monthly cashburn was in the single-digit million dollars and confirmed that the firm had crossed $1 billion in annualised gross merchandise value terms.

  • Published On Mar 14, 2024 at 08:52 AM IST

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Best Fast Dropshipping Service & Business India

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