Zepto Drops Handling and Surge Fees on All Orders After $450 Million Funding Round

Weeks after concluding a $450 million investment round, the quick commerce platform Zepto has lowered the minimum order amount to INR 99 for free delivery and eliminated the handling fee and surge charge that are assessed to its customers for each order. The company is promoting "zero handling fee", "zero delivery fee (for orders over INR 99)", and "zero rain and surge charge" on its app under the banner of its "All new Zepto experience".

When it came to handling the products in customers' orders at their locations, Zepto used to charge a handling fee. In a similar vein, extra charges—like a rain fee—are used to reward delivery partners. In response to ET's questions, the business stated that Zepto will keep offering its delivery partners incentives.

Zepto Planning to March Ahead of Blinkit and Instamart

Each order from rival Blinkit incurs a handling cost of INR 11 and a delivery fee of INR 30 for orders under INR 199. For orders under INR 199, Instamart charges a handling fee of INR 9.8 and a delivery fee of INR 30.

This is in addition to other fees and charges that are applied to each order during busy hours, like the surge and rain fees. The Bengaluru-based business has now established itself as the lowest-priced fast commerce platform. Zepto's $450 million round, which included both main and secondary transactions, increased its cash reserves to $900 million, according to an October 16 ET story. Analysts predict that as platforms concentrate on growing and cutting prices, this will heighten competitiveness and the industry's capital burn.

As of September 30, Eternal, the parent company of Zomato, a meal delivery app, and Blinkit, the biggest rapid commerce company, had more than INR 18,000 crore in cash on hand. Likewise, as of September 30, Swiggy's Instamart cash amount was INR 4,605. Additionally, it intends to use a qualified institutional placement (QIP) to raise INR 10,000 crore.

Raining Discounts as Quick Commerce Competition Intensifies

Discounting will persist and, in fact, intensify in the upcoming months as platforms concentrate on boosting their cash balance as the industry becomes more competitive, analysts predict.

In an effort to support their unit economics, or profits from each transaction, platforms have been adding a variety of costs to client orders in June, including platform and handling fees, convenience, small-cart, and rain levies, according to an ET report. Each order cost between INR 6 and INR 30. Users have been criticising Zepto for purportedly using dark themes in its app over the last few months.