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As Zomato turns profitable, it slashes delivery commission for some restaurants

Zomato is slashing commission for food orders placed through it for partner restaurants as the restaurant listing and food delivery platform has turned profitable throughout the 24 countries it operates, across all its businesses, Zomato announced in a blogpost.

Deepinder Goyal, founder and CEO of Zomato, wrote in the blog that the company adopting a zero commission model as it is generating ‘enough cash’ from three key regions India, Southeast Asia, and the Middle East, in core advertising business to fund its businesses including online food ordering. The company charges around 10% commission per order while its rival Swiggy charges a higher fee of 15% per order.

However, the zero commission is currently applicable to those restaurant partners who  qualify the eligibility based on a set of predefined criteria”.

The ‘zero commission’ eligibility: The criteria includes number of orders processed with Zomato on a weekly basis, and customers’ ratings. Goyal writes that “70% of our restaurant partner base qualifies” for zero commission currently. The eligible partners will be notified via e-mail within three days.

For the month of July, the company surpassed 3 million online orders, it had announced it in a blogpost. Also, the company had reported food ordering revenues of $9 million for the financial year ended 31st March 2017 (FY17), around 8 times of FY16. Swiggy’s claims stands ahead of Zomato with  4 million orders per month. However, in conversations with neighborhood parcel kitchens, owners said that Swiggy charges a higher fee of 15% per order.

Zomato’s highlights

Zomato has gone aggressive in past two years on food delivery space to gobble players like UberEATS and Swiggy. The company had started its online ordering service back in March 2015, while Swiggy was founded in August 2014.

Last week, Zomato acquired last mile logistics startup Runnr to strengthen its logistics services. HSBC had said hat it needed to build a last mile delivery system for market leadership and profit, when it had cut its valuationNote that the company is also reported to be in advanced talks with Alibaba’s Ant Financial to raise $ 200 million.

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