Zomato introduces separate fee on cash-on-delivery orders; charges vary across users

Online food delivery platform Zomato has started a separate charge on cash-on-delivery (COD) orders, with the fee varying across users and order values, checks on the company’s app showed on Saturday. 

The charge, listed as a “Pay on Delivery Fee” in the order bill, applies when customers choose to pay for their food in cash at the time of delivery. The amount is not uniform across orders, with different fees appearing for different transaction values. The exact basis for determining the charge could not be immediately ascertained. It remains unclear whether the fee is linked to factors such as order value, location or other parameters. 

Swiggy does not levy separate COD fee 

Zomato’s rival Swiggy does not currently levy a separate fee on cash-on-delivery orders. 

The development comes as food delivery platforms increasingly experiment with different fee structures and monetisation models. Zomato already charges a platform fee on food orders, apart from applicable delivery, packaging and other charges, depending on the order. 

Eternal reports 47% sequential profit decline 

The introduction of the COD fee comes against the backdrop of Eternal Ltd, Zomato’s parent company, reporting a 47.1% sequential decline in consolidated net profit for the quarter ended June 30. A higher tax outgo, along with increased depreciation and finance costs, offset growth in revenue and operating profit. 

The company posted a consolidated net profit of ₹92 crore in the June quarter, compared with ₹174 crore in the March quarter. Revenue from operations rose 16.9% sequentially to ₹20,211 crore, from ₹17,292 crore, while EBITDA increased to ₹594 crore from ₹486 crore. 

Eternal’s EBITDA margin also improved marginally to 2.9%, compared with 2.8% in the preceding quarter. The decline in net profit came despite an improvement in operating performance. Eternal’s tax expenses more than tripled to ₹180 crore during the quarter, compared with ₹54 crore in the March quarter. 

Depreciation and amortisation expenses rose to ₹311 crore, from ₹233 crore, while finance costs increased to ₹96 crore, from ₹77 crore. The higher expenses more than offset the company’s improved operating performance, resulting in a sequential decline in net profit.