India's online food delivery platforms, Swiggy and Zomato have been drawing huge orders since the last two-three years for now. But as the news breaks out that the customers ordering food on these apps are paying more than the prices shown in the restaurants, the two big players have started to register a drop in the orders placed.
As per a report in the Economic Times, in the last months, Swigy and Zomato has introduced dynamic discounting, tightened order cancellation rules and hiked prices of their loyalty programs that have eventually hampered the number of orders received.
One of the industry analysts privy to the development said, "The drop in order volume is estimated at about 5-6% every month since October for Zomato and December for Swiggy, in line with when these platforms tightened policies." Notably, the period of these numbers are before Zomato acquired Uber's food aggregator business in India, Uber Eats, for $350 million in an all-stock deal. "How the dynamics change post-Uber Eats deal will be clearer next month," he further added. In this share swap deal, Uber got around a 10 per cent stake in Zomato.
End of deep discounts
In the last few months, the online food delivery apps have drastically changed their pricing across the portfolios of services they are ordering. For instance, Zomato has introduced "on time or free delivery" that would mean if a customer opts for an additional payment of Rs. 10 on selected restaurants, the customer will get the order for free if it not delivered within the time.
Further, it has also increased the membership fee for the Gold programmed. Possibly, the biggest irritant for the customers has been the delivery fees which Zomato has increased as per the distance. A customer will have an amount between Rs 16 the base charge to more than Rs 45 for small-value orders in Bengaluru.
Similarly, Swiggy has also taken a series of measures to pare the losses the company has been registering while offering steep discounts. Swiggy has steeply increased the delivery charges, tightened cancellation rules and order escalations, and raised prices of its loyalty program 'Super'. Ankur Pahwa, Partner, Ernst & Young added, "Profitable and sustainable business models are starting to take centre stage, with market leaders attracting a vast majority of investments." With the clear case of the duopoly in the country's online food delivery market, customers are expected to pay more on placing an order from home.