Online food delivery giant Swiggy is reportedly considering doubling its platform fee on food orders, potentially raising it from Rs 5 to Rs 10 per order in the coming month. Here are the key insights from the media report and Swiggy’s response:
Fee Increase Strategy
Swiggy aims to bolster its financial position and reduce losses ahead of its much-anticipated Initial Public Offering (IPO), slated for later this year. The proposed hike in platform fees is viewed as a strategic move to enhance revenue streams and improve profitability.
Experimentation with Platform Fees
The company has initiated an experimental phase by targeting a select group of users with the increased platform fee. This strategy follows a similar approach adopted in April last year when Swiggy introduced a nominal fee of Rs 2 for certain customers, eventually extending it to all users. Currently, the platform fee stands at Rs 5.
Company Statement
In response to the reports, Swiggy emphasized that the Rs 10 platform fee is part of ongoing experiments aimed at better understanding consumer preferences. A spokesperson clarified that there are no immediate plans for a significant fee hike, and any adjustments will be based on serving users effectively.
IPO Preparation
Swiggy’s co-founder and CEO, Sriharsha Majety, confirmed that the company is actively preparing for its IPO, with plans to raise an estimated $1 billion through the public offering. The IPO preparations include strengthening the board with independent directors and engaging multiple investment banks for the process.
Investment Banks Involved
For its IPO journey, Swiggy has reportedly enlisted the services of seven investment banks, including renowned names such as Kotak Mahindra Capital, Citi, JPMorgan, BofA Securities, and Jefferies. These banks are expected to play pivotal roles in facilitating the IPO and managing investor relations.
As Swiggy gears up for its IPO debut, the potential platform fee increase underscores the company’s strategic focus on financial sustainability and investor confidence. The ongoing experimentation reflects Swiggy’s commitment to adapting to evolving market dynamics while delivering value to its users.
