Whalesbook
Zepto and Swiggy's Instamart have eliminated handling and surge fees, aiming to attract more customers. This move has led to a sharp decline in earnings for their delivery partners, dropping from an average of Rs 34–42 in early 2024 to Rs 15–27 in densely populated areas.
To offset fee waiver impacts on their margins, platforms are increasingly combining multiple deliveries into a single trip (batching). While this boosts company efficiency, it reduces the income per order for delivery partners as they don't receive full base rates for each delivery. Delivering two orders separately might have yielded Rs 30–54, but batching can result in Rs 20–49 total, lowering per-order earnings to as low as Rs 10–24.50.
Zepto stated its partner compensation is stable and incentives for batched deliveries are rewarding. Swiggy Instamart did not respond. Blinkit, a competitor, has not waived its fees.
Impact: This news affects the operational costs and profitability models of quick commerce companies, potentially leading to delivery partner dissatisfaction and labor issues. For investors, it signals a cost-saving drive that might hurt service quality or partner morale, impacting investor confidence in the segment.
Impact Rating: 7/10
Difficult Terms:
Quick Commerce: A business model focused on delivering goods very rapidly, typically within 10-30 minutes.
Handling Fees: A charge for picking, packing, and preparing items for delivery.
Surge Fees: An additional charge during high demand to incentivize more partners or balance supply/demand.
Earnings per Order: The average money a delivery partner receives for completing one delivery.
Staffing Firms: Companies that recruit and supply workers to other businesses.
Fee Waivers: The act of removing or foregoing certain charges.
Batching: Combining multiple customer orders into a single delivery run for efficiency.
Margins: The difference between revenue and costs, indicating profitability.
Dark Stores: Small warehouses for online order fulfillment, not for customer browsing.
Base Rates: The standard or fixed amount paid to a delivery partner before incentives.
Variable Pay: Compensation that fluctuates based on order volume, distance, time, etc.
Fixed Rates: Compensation that remains constant.
Incentives: Additional payments for meeting performance targets or working during specific times.