Hyperlocal delivery players such as Milk Basket, Swiggy-owned Supr Daily and Dunzo have passed on additional charges to users, as they fight to contain ballooning losses and conserve cash.
The move has been driven in part by the cost of running services during the Covid-19 induced lockdown, including investment to maintain hygiene and safety, increased pay to delivery executives, as well as conserve cash and stay afloat amid a tough fundraising environment.
Micro-delivery firms Milk Basket and Supr Daily have started levying a packaging charge and service fee.
“…with the multi-fold increase in costs of serving your order – our losses have jumped and hence leaving us with the only option to pass a portion of this cost to our customers,” Milk Basket CEO Anant Goel said in an email to customers.
On Supr Daily, the app notified consumers that it will charge Rs 2 per litre for fresh milk and Rs 20 for one-time orders.
Micro-delivery startups make early-morning deliveries, typically before 9 am, from a select set of grocery items and milk, ordered before 10 pm the previous night.
However, if the order value is below Rs 100 and average items for delivery are two or three, the unit economics only make sense if one delivery executive can make multiple deliveries within a short period or if businesses start charging consumers a fee.
Dunzo and Swiggy’s Genie product, too, have hiked delivery fee for their concierge services.
Swiggy has also paused renewals of its loyalty subscription programme Super which offers customers free delivery for a nominal fee on food delivery.
“We ran out of subscriptions,” Swiggy told its customers on the app.
Experts and industry insiders told ET that the average wages of delivery executives have crept up to Rs 30,000 per month from Rs 15,000-20,000 prior to the lockdown, as companies seek to incentivize more workers to get back amid an acute labour shortage.
The higher wages have increased cash burn for hyperlocal delivery players, which get wafer-thin to no margins from local stores and retailers.
Swiggy and Dunzo have also increased delivery fees on orders to cover higher delivery costs.
Google-backed Dunzo which uses a dynamic pricing algorithm, has seen its delivery fee more than double, according to customer invoices seen by ET.
Swiggy, which used to offer free delivery on store orders valued at more than a few hundred rupees and Rs 35 for delivery of items valued at under Rs 100, is now charging Rs 70 for all orders under Rs 299, and Rs 45 for all orders over that amount.