Zepto Breaks New Ground with Platform Fee, Aims for Profitability by May 2024

13 Mar 2024 , 12:09 PM

Zepto, a prominent hyperlocal delivery player, has made waves by becoming the first quick-commerce company to introduce a platform fee of ₹2 per order, targeting a specific user segment. This move signifies a departure from the norm, as platform fees have traditionally been associated with more established categories like e-commerce and food delivery.

Notably, competitors such as Blinkit and Swiggy Instamart, which directly rival Zepto, currently do not impose a platform fee on grocery orders. However, they do charge a platform fee for food delivery orders, albeit initially at a nominal rate of ₹2. As demand increases, some have even hinted at raising this fee, reaching as high as ₹10 during peak periods to capitalize on heightened demand. This suggests the possibility that Zepto may also explore higher fees in the future.

In addition to the platform fee, Zepto has introduced other charges such as a ‘late night handling fee’ of ₹15 for orders placed after 11 pm in specific cases. Furthermore, the company has discontinued free deliveries for select users and now imposes delivery fees ranging from ₹5 to ₹28, depending on the order value. These measures aim to boost profitability, with Zepto setting its sights on achieving EBITDA profitability by May 2024. Initially, deliveries were free for cart values above ₹99 or ₹199, depending on customer transaction frequency.

A spokesperson for Zepto emphasized the company’s focus on core operating efficiency and cost reduction rather than relying solely on delivery fees for profitability. Despite the introduction of fees, Zepto remains committed to achieving profitability, as demonstrated by initiatives like the Zepto Pass loyalty program, which offers free deliveries and enhanced discounts. During the pilot phase of Zepto Pass, subscribers reportedly increased their monthly spending on the app by over 30%.

While rivals like Blinkit and Swiggy Instamart have also experimented with nominal delivery fees in certain regions of India, Zepto stands out as the sole major player solely dedicated to quick-commerce operations. In its pursuit of diversifying revenue streams, Zepto is also developing in-house brands like Relish, its meat division.