| |DECEMBER, 202419One company Chose to Take it Down a NotchThat is Magicpin, a hyperlocal e-Commerce app, which has reduced its platform fees by 5 for each delivery. This is considered to be half of what its competitors charge. On the social media platform X, Magicpin's founder and CEO, Anshoo Sharma, said that platform fees for deliveries this year would be lowered. For the rest of this year, he claimed that there will be no increases in the cost of food delivery services. Previously, Magicpin charged a platform 7 as platform fee before Deepawali and it later came down to about 29 percent. This has led to an annual increase in order volume of twice."We can find a balance towards the welfare of our delivery heroes and our customers during festive seasons. Hence, here is a Magicpin promise to let more people enjoy the festive season. Magicpin's platform fees slashed by 50 percent of competition to 5 only for the rest of the year", Sharma said on X."This Diwali, we went against the current trend and took some hard platform pricing decisions. Result: More than half a million orders, love, and support were received during the long festive weekend! This is 2X of what we did last year",Sharma said in a post on X.How Charges WorkIncreasing or adding platform fees is believed to be a part of the strategy of companies to grow their profits and sustain their business models. It also matters how these companies may implement their platform fees. Some companies may experiment with higher rates in the future, while some may change them according to the demand for particular services.The cost of the food delivery app/platform is said to be higher than the cost of your delivery's fuel. Its purpose is believed to maintain connectivity and ensure that the service is quick and effective. Your favorite restaurant may also receive a tip from this amount as well. But the reality remains unchanged: customers still have to pay more. Businesses will see a significant increase in revenue on the other hand. This is said to be a result of businesses distributing roughly 20­25 lakh orders per day. It is said to be crucial for companies as they are limited in how much they can charge restaurants in commissions, which has been a controversial topic and ranges from 25 to 35 percent.Customers Still Have to Pay MoreThe bill is only going to go higher when the platform fees go up. These fees have a big influence on the cost structure of online meal orders since they are a regulated source of income for businesses.It is anticipated that the cost of ordering food online will increase further. Swiggy and Zomato are believed to be working to improve their unit economics and overall profitability, and the platform fee increase is said to fall in line with that effort.Are Platform Fees Good or Bad?In a way, platform fees are bringing in more profitability for companies, which is essential for their initial public offering. However, having ethical practices over cost, transparency, and the value they provide to all parties involved in the delivery process is crucial for businesses to maintain their customer base. Therefore, it is believed that both customers and restaurants should be made well aware of any fee charges and their purpose. Food delivery charges can be fair in an ethical system when supporting the sector without unjustly hurting any player.
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