In a scenario where cab aggregators and airlines are busy building strategies to grab maximum wallet-share of consumers during the crisis hour, how can food business lag behind?
Norwest Partners-backed food delivery startup Swiggy, revived the concept of 'Surge Pricing' that has previously been mooted with great insistence. The concept refers to the extra charge applied by company if there is an increase in demand.
After observing the recently grown 'home-delivery' system, and analyzing the customers' need to get things delivered at doorsteps, Swiggy has decided to earn few extra pennies by charging delivery fee on selective occasions.
The food delivery firm is experimenting with a new model in Bengaluru and Hyderabad by charging Rs 20 per delivery on food orders placed on national holidays, festivals and rainy days, when the availability of delivery boys is low.
Similar to the argument of cab aggregators like Ola and Uber, where the surge fares reach the drivers, Swiggy claims to distribute the amount among delivery boys as an incentive that may lure them to work on holidays and order-heavy days.
A company spokesperson told the Mint newspaper: "It (surge) would be applicable on selective occasions like national holidays, festivals and during days of excessive rains to incentivise the delivery executives. The surge fee received is passed on to the delivery executives."
However, the company will extend its practice to all cities it operates in: Delhi, Gurgaon, Mumbai, Pune, Kolkata, Chennai, Bengaluru and Hyderabad.
This is the second time company is imposing a delivery fee on consumers. It had increased the minimum order value for free delivery from Rs 150 to Rs 250, with a delivery fee of Rs 30 to cut losses and build a viable business model in October last year.
With the presence in eight major cities, 3,000 delivery boys and 5,000 restaurants on its platform, Swiggy, owned by Bundl Technologies Pvt. Ltd, claims to have one million app downloads.
Swiggy is also planning to set up kitchens jointly with restaurants. These kitchens will function as production units without dine-in facilities and cater to demand generated on Swiggy from surrounding localities.
