Unveiling Swiggy’s Mysterious Platform Fee

When the content copy isn’t doing it’s job at explaining why a customer is getting charged or affected, it breaks customers trust. When things don’t add up and rather than reaching out to the customer service, an easier option is to quit the app(retention drops), change the product(competitor wins) or use it with a pinch of a salt(trust or loyalty degrades).

Let me give you an example of this with Swiggy’s platform Fee.

Swiggy is an Indian online food ordering and delivery platform. It’s valuations is around $5.5 billion. Below is how food billing would look for any user.

If you see above, there is a section for platform fee which is charging Rs 2. The explanation for the fee is “This fee helps us operate and improve our platform, delivering a seamless app experience”. What does that mean in layman’s terms?

“Swiggy’s app has been operating for 10 years now and why do they need Rs 2 from my order to run their app suddenly? What changed? Aren’t they already charging me for each food order? Food delivery services make money by taking a cut of the food revenue it delivers. Then why do they need to ask me for more money over it?”

What do users think about the fee?

Users see it is unnecessary. And on top of that the copy (“helps us maintain our app”) doesn’t seem to explain where this money is going and how it helps the users in a tangible way.

Why did Swiggy actually added the fee?

Their valuation is slashed in half from $10.2 billion dollars in Jan 22 to $5.5 in May 23. This must have impacted the overall company economics, its ability raise and burn cash to support food discounts. Now, it’ in rush to make money by charging its customers more.

A news article explains:

The fee, which was rolled out in phases over the past week, is likely to be extended to other regions. That is especially helpful for the business which has fast-tracked its profitability timelines as investors continue to tighten their purse strings.

The primary reason behind the move is the slowdown in the delivery business. “The company was no exception,” said Swiggy’s chief executive and co-founder Sriharsha Majety in an email to employees which mentioned the company slashing 380 jobs.

What’s the alternative?

Adjust the Rs 2 in the food item value. Swiggy is already charging money over each order, might as well add the Rs 2 in item value to keep the overall billing maths simple for a user.