QComm Orders Are Becoming More Feesible

Time of India

a day ago

Quick commerce companies have begun adding a range of fees — from platform and handling charges to convenience, small-cart and rain levies — to customer orders in an attempt to shore up their unit economics, or earnings from each transaction, according to industry executives and analysts.
A check across the top five quick commerce apps shows these charges, which come on top of the standard delivery fees and vary across cities and platforms, range between ₹6 and ₹30 per order.
On its app, Zepto says it levies a handling charge 'towards handling of products in your orders at our stores', while rival Blinkit says this fee goes towards ensuring 'proper handling' and 'high-quality quick deliveries'. Zepto and Instamart, which also offer bulk orders at discounts.
Both platforms charge a higher handling fee on large baskets.
There is also a surge fee, charged during high-demand hours or when there is a shortage of delivery workforce and the order value is below certain thresholds.
Eternal Ltd-owned Blinkit, Swiggy's Instamart and Zepto control 80-85% of India's quick commerce market.
These fees are not unusual in the consumer internet ecosystem. Companies in segments including food delivery, online travel, movies and event ticketing and big ecommerce platforms such as Amazon and Flipkart also levy similar charges.
For the quick commerce segment, however, these fees assume significance given the rising competition in the sector, which has resulted in the top three players, as well as others like BigBasket's BBnow and Flipkart Minutes, increasing discounting to all-time high levels, as reported by ET on June 16.
Most platforms have also raised the minimum order value to unlock free deliveries, which again suggests that platforms are pushing customers towards higher AOV (average order value) purchases, analysts at brokerage firm JM Financial wrote in a research report. 'These service fees lead to improvement of take rates for these platforms as it directly goes to revenue and subsequently leads to margin improvement.'
Take rates refer to the ratio of a company's gross order value to its revenue.
Industry executives said intensifying competition has prevented them from increasing delivery charges, where they continue to subsidise a gap between what they collect from a consumer and pay to the gig worker.
'One of the components of expanding losses, besides expansion of the dark store footprint, is the inability to increase delivery fees,' a senior executive at a quick commerce company said. 'Right now, companies are focused on retaining their power users as much as they are going behind new customers. For most new markets, anyway companies offer a few free or discounted deliveries.'
Market leader Blinkit reported an operational loss of ₹178 crore for the January-March period, almost five times wider than the same quarter last year. Swiggy Instamart's operating loss jumped nearly threefold to ₹840 crore in the same quarter. The parents of both Blinkit and Instamart are listed.
Instamart, Blinkit, Zepto, BigBasket and Flipkart Minutes did not reply to ET's emails seeking comment.
Earlier, food delivery players such as Zomato, also owned by Eternal, have reported a meaningful contribution to their unit economics from the levy of a platform fee. Zomato and rival Swiggy have increased their platform fees from ₹2 in August 2023 to ₹10 in October 2024. The companies have retained the fees at ₹10 as they fear customer attrition in a market that is already witnessing sluggish growth.
For quick commerce sector, however, the market is steadily expanding, and is estimated to be $31 billion by FY28 from $8.2 billion in FY25, as per BNP Paribas.
'As new platforms launch their service and as incumbent platforms enter each other's turf, they are likely to offer higher discounts initially. We expect even high-end convenience seeking users to shift in search of better bargains,' the brokerage firm said.