Tezzbuzz Desk – Online food delivery platform Zomato has introduced a new fee on cash-on-delivery or COD orders. This charge appeared for some users on the company's app on Saturday. In the order bill it is being shown as “Pay on Delivery Fee”.
This fee is being charged to customers who choose to pay for their food in cash at the time of delivery. The special thing is that this charge is not the same for all users and orders. Its amount appears to vary depending on the value of the order and the user.
The basis for determining fees is not clear
At present it is not clear on what basis Zomato is deciding this fee. Whether it depends on the order value, customer location, payment history or any other parameter, its complete details have not been revealed.
There is no official statement from Zomato yet on this matter. At the same time, rival platform Swiggy is currently not charging any separate fee on cash-on-delivery orders.
Zomato already charges platform fees on food orders. Apart from this, delivery charges, packaging fees and other charges are also added to the bill as per the order.
Big earning from small charge
The impact of such small charges can be seen on a large scale on the company's earnings. According to the report, Zomato processes around 23 to 25 lakh food orders daily.
If a charge of Rs 5 is imposed on every order, then theoretically the company's daily additional earnings can be Rs 1.15 crore to Rs 1.25 crore. On annual basis this amount can reach around Rs 420 to 456 crores.
However, this is just an approximate ceiling, as not all customers opt for cash-on-delivery. Still, it can be estimated how important small charges can be for platforms with large order volumes.
Platform fees started in 2023
Food delivery companies introduced platform fees in 2023. According to the report, initially Swiggy had tried a platform charge of Rs 2. After this, Zomato also implemented this fee.
This charge increased with time. Earlier this year, Zomato's platform fee was increased from Rs 12.5 to Rs 14.99 per order. GST is applicable separately on this.
Earning thousands of crores from platform fees
According to a report, e-commerce and food delivery companies can earn Rs 3,500 to Rs 4,000 crore annually through platform fees.
This model is beneficial for companies because small charges are added at checkout rather than increasing the main price of food or delivery. Now efforts are also being made to earn additional income through payment method through COD fees.
This will have a direct impact on customers. Apart from the cost of food, users paying in cash may also have to pay platform fees, delivery charges, packaging fees, taxes and now pay on delivery fees.