Zepto Revolutionizes Quick-Commerce with New Platform Fee: A Closer Look

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Zepto Revolutionizes Quick-Commerce with New Platform Fee: A Closer Look

Team Finance Saathi

13/Mar/2024

Key Points:

Zepto Breaks Ground: Zepto has boldly introduced a ₹2 per order platform fee, making it the first quick-commerce company to take this step.
Evolution of Charges: Quick-commerce giants like Blinkit and Swiggy Instamart started with nominal fees, often ₹2, gradually increasing them during peak times to capitalize on high demand.
Zepto's Unique Approach: Zepto not only imposes a platform fee but also introduces a 'late-night handling fee' and varying delivery charges, signaling a shift in its revenue strategy.

In a groundbreaking move, Zepto, a rising player in the quick-commerce industry, has set a new precedent by introducing a platform fee of ₹2 per order. This strategic decision positions Zepto as the first in its league to implement such a fee, marking a significant shift in the business models adopted by quick-commerce companies.

The Evolution of Quick-Commerce Fees:

Traditionally, quick-commerce companies, including competitors like Blinkit and Swiggy Instamart, have been known to charge nominal fees, usually starting at ₹2. These fees, initially applied uniformly, were later adjusted to reflect peak demand, occasionally reaching ₹10. However, Zepto has taken a distinctive approach by introducing a platform fee, breaking away from the traditional fee structures embraced by its competitors.

Zepto's Additional Charges:

The platform fee is not the sole addition to Zepto's revenue streams. The company has also introduced a 'late-night handling fee' of ₹15 for orders placed after 11 pm in specific cases. Moreover, the delivery fees charged by Zepto now range between ₹5 and ₹28, a departure from the initial approach where deliveries were free for cart values above ₹99 or ₹199, depending on the transaction frequency of customers.

Zepto's Response to the Decision:

A spokesperson for Zepto defended the move, stating, “We don’t believe in being over dependent on delivery fees to be profitable. We believe in core operating efficiency and cost reduction to be profitable. We are on track to achieve the EBITDA positive milestone even with much lower delivery fees - Zepto Pass is the quintessential example of this.”

This statement sheds light on Zepto's strategic vision, emphasizing a commitment to operational efficiency and cost reduction as key pillars of profitability, rather than relying solely on delivery fees. The mention of 'Zepto Pass' suggests an alternative model or service that aligns with their profitability goals.

Navigating the Quick-Commerce Landscape:

The quick-commerce landscape has evolved rapidly, driven by consumer demand for convenience and speed. As Zepto pioneers a new approach with its platform fee, it prompts a reevaluation of existing norms within the industry. This decision not only differentiates Zepto from its competitors but also opens up discussions about the sustainability of business models reliant on nominal fees.

Testing the Waters with Additional Fees:

While Zepto's current platform fee stands at ₹2, there is speculation that the company might test higher fees in the future. This dynamic approach indicates Zepto's willingness to adapt to market conditions and explore various revenue streams beyond the traditional fee structures prevalent in the industry.

Late-Night Handling Fee and Variable Delivery Charges:

The introduction of a 'late-night handling fee' addresses the challenges associated with processing orders during off-peak hours. This move not only reflects the operational intricacies of quick-commerce but also highlights Zepto's responsiveness to the unique demands of its user base.

The variable delivery charges ranging from ₹5 to ₹28 demonstrate Zepto's flexibility in catering to diverse customer preferences and transaction frequencies. This departure from the initial model of free deliveries for specific cart values signifies a strategic shift in aligning delivery fees with the evolving dynamics of customer behavior.

Zepto's Journey to Profitability:

Zepto's commitment to achieving EBITDA positive milestones, even with lower delivery fees, underscores the company's confidence in its operational efficiency and cost-effective strategies. The reference to 'Zepto Pass' hints at a potential subscription-based model or loyalty program, showcasing Zepto's innovative approach to sustainable profitability.

Conclusion:

As Zepto boldly forges ahead with its platform fee, the quick-commerce landscape is witnessing a transformation that challenges existing norms. Zepto's multifaceted approach to additional charges, coupled with a commitment to operational efficiency, positions it as a dynamic player in the industry. The evolving nature of fees and the potential testing of higher charges suggest that Zepto is navigating the complexities of quick-commerce with a strategic mindset, keeping the balance between profitability and consumer satisfaction. As consumers and competitors watch closely, Zepto's journey promises to shape the future of quick-commerce in unforeseen ways.

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Zepto Revolutionizes Quick-Commerce with New Platform Fee: A Closer Look

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