Prices of several dishes were found to be 20-30% higher online than their offline prices.
New Delhi: The high commissions paid to Swiggy and Zomato have forced the majority of restaurants to raise their online prices. As a result, many restaurants either launch an application where customers can order with fantastic discounts or try to entice customers with good offline discount offers, without any delivery charges.
The Sunday Guardian compared the prices of several dishes online and offline and found out that the prices are almost 20% to 30% higher.
For instance, this correspondent found a huge difference in the price rate of the dishes provided by Hooked On Momos, such as Pizza Makhani Gravy Momo costs Rs 148 offline as well as on Hooked On Momos’ website, while on Swiggy and Zomato app, the price was around Rs 189; similarly, Veg Fried Rice Combo costs Rs 130, while on Swiggy and Zomato app, the price is around Rs 170. Similarly, the price of Mixed Veg at Beliram Dengchivala also differed; the price on Swiggy and Zomato app was Rs 324.50, while the offline menu showed Rs 225.
When The Sunday Guardian approached a restaurant manager, who wished to stay anonymous, to find out the reason for such high prices, he said, “It is because of the commission we pay to online delivery partners. The commission is almost 40% to 45% higher. So, if we keep the same prices, it will affect us. Also, online delivery partners provide discounts and offer to the customers, so naturally, we face the loss.”
The Sunday Guardian went to another restaurant, Pind Balluchi, Lajpat Nagar. An employee said, “Currently, we have kept the same prices in both Swiggy and Zomato, because of the convenience of the customers.” The employees have also stated that the technical team has been working on launching an application so that the customers can enjoy discounts.
This correspondent also reached out to Swiggy and Zomato. Swiggy told this correspondent, “Menu level pricing has always been at the discretion of the restaurant partner and Swiggy does not play any role in it.” Adding to this, Swiggy sent a screenshot of a disclaimer, where it was stated, “All prices are set directly by the restaurant.”
While speaking about commissions, Swiggy said, “Commissions are part of the commercial construction and are mutually agreed upon while finalizing the contract.”
However, Zomato hadn’t replied till the time the article went to press.
On 1 July 2021, the National Restaurant Association of India (NRAI) submitted information to the Competition Commission of India (CCI) outlining its concerns and problems with the functions of online delivery partners, which should operate as an impartial market. To this, the CCI directed an investigation into alleged anti-competitive behaviour by food aggregators Zomato and Swiggy.
As per the information submitted to CCI, NRAI states, “As per NRAI, in southern region, Swiggy commands an overwhelming market share of nearly 70% and in northern India, it is Zomato that commands an overwhelming market share of 70%. Owing to the nature of model that is followed by both these platforms which work in hyper localised markets, the analysis has to be region-specific and the whole of India should not be considered as one single relevant geographic market.” According to NRAI, Swiggy and Zomato gather customer information based on their prior purchases and use that information to optimize their offerings to individual customers. As a result, their market positioning is strengthened by the data they have, which deters new competitors from entering the relevant market.
To bring relief to restaurants and customers, on 21 June 2022, officials of the Online Network for Digital Commerce (ONDC) had preliminary discussions with a group representing Indian restaurants. As per the sources, a note by ONDC stated that the ecosystem for online food delivery is currently monopolised or cartelized, but with more NPs (network partners) providing their services on the open network without prior filters, this situation will improve. People familiar with the development stated that it would still take another 6 to 12 months for everything to fall into place.