The Increasing Presence of Platform Fees in Delivery Applications

Recently, quick-commerce startup Zepto has introduced a platform fee, marking the first instance of such a charge in its sector. Zepto now imposes a platform fee of ₹2 per order, applicable to certain users. Additionally, Zepto applies a 'late-night handling fee' of ₹15 for orders placed after 11 pm in specific cases.

Platform fees, imposed by delivery apps, represent a fixed charge customers pay when placing an order, regardless of its value. These fees are essentially operational charges paid to the delivery app operator for the convenience of online ordering.

Major food delivery platforms in India, like Swigs and Zomato, have long been implementing platform fees on each order. For example, Zomato initiated a ₹2 platform fee on selected orders in certain markets, while Swigs has raised its platform fee to enhance unit economics, which is the revenue generated by a business from each unit of sale or order.

Platform fees aren't exclusive to food delivery apps; India's prominent fashion e-commerce platform, Mystra, currently imposes a platform fee of ₹20 for each order placed through its app.

These fees form part of companies' strategies to enhance profitability and sustain their business models. However, the execution of such fees may vary, and companies may experiment with higher fees in the future or adjust them based on demand.

Fee structures in delivery apps are not unique to India but are also prevalent in other countries. Delivery apps in the United States, like Door Dash and Uber Eats, often charge a service fee, similar to a platform fee, to cover operational costs such as app maintenance, marketing, and payment processing. In Europe, platforms like Deliveroo and Just Eat implement fees contributing to their revenue, including delivery fees, service fees, or small order fees.

In Africa, the burgeoning delivery app industry sees varied fee structures, with some platforms imposing flat platform fees on every order, akin to convenience charges. These fees are integral to covering operational costs and providing service to customers, with transparency typically maintained by informing customers about these fees during the ordering process.

The ethical implications of platform fees, delivery fees, or service charges levied by delivery apps spark debate. While essential for the operation and sustainability of delivery platforms, concerns arise regarding their impact on restaurants and consumers. Some argue that high fees could be predatory, especially if they significantly diminish restaurant profits, potentially jeopardising smaller establishments' survival. In response, certain jurisdictions have capped delivery fees to support local businesses.

Transparency regarding these fees is paramount, ensuring customers and restaurants are fully informed about the charges and their purpose. Ethical practices involve fair charges that do not disproportionately burden any party involved and contribute positively to the food delivery ecosystem.