Zomato now charges you ₹5 extra for cash-on-delivery orders
What's the story
Zomato, the food delivery platform owned by Eternal, has introduced a new charge for its customers. The company is now levying an additional fee of ₹5 on cash-on-delivery (COD) orders. The "Pay on delivery fee" is shown as a separate line item in Zomato's bill summary. However, in some cases, the charge differs, with users being billed ₹7 or even up to ₹20, as per Moneycontrol.
Market dynamics
Intensifying competition in food delivery space
The introduction of this new charge comes as the food delivery space becomes more competitive.
New players are making their presence felt, with Rapido's Ownly gaining traction and Flipkart testing its Eat In food-delivery service.
Start-ups like Swish have also secured fresh funding, putting even more pressure on incumbents such as Zomato and Swiggy.
Fee specifics
Fee only for cash payments
The new fee is applicable only on orders where customers opt for cash payment on delivery.
It is different from Zomato's platform fee, restaurant packaging charges, and GST.
Customers who choose online payment don't have to pay this additional charge.
This strategy could help Zomato generate more revenue by monetizing the payment method itself, with small charges at checkout.
Revenue potential
Potential revenue boost for Zomato
Zomato processes around 2.3-2.5 million food orders a day.
If every order had a ₹5 charge, it would mean an additional revenue of ₹1.15-1.25 crore per day or about ₹420-456 crore annually for the company.
This shows how even small charges can become significant revenue streams at such a large scale, despite cash-on-delivery orders being only a fraction of Zomato's total orders.
Fee evolution
Rise in platform fees
Zomato's platform fee was first reported in April 2023, with Swiggy testing a ₹2 charge. The company later introduced its own platform fee, which has now been increased to ₹14.99 per order from the earlier ₹12.5, excluding GST.