Flipkart is working on a cap on the costs restaurants incur on its upcoming food delivery platform — at 15-20% of order value covering commission as well as any advertising spend — according to people aware of the matter.
The ceiling would be a first in India’s food delivery market. Zomato and Swiggy charge restaurants commissions of 16-30% of order value, with advertising and promotion fees on top and no stated limit on the total outgo. Advertising is among the fastest-growing and highest-margin revenue streams for the incumbents.
FE had reported in August that Flipkart was in advanced talks with about 300 restaurants in Bengaluru for the pilot, offering a commission of 10-11% along with a mandate to match offline menu prices. At that stage, restaurants were pushing for listing and discovery to be kept free of advertising fees and paid promotions, along with rankings based purely on customer reviews and ratings. That has since been settled the other way. Advertising and paid ranking will be part of the platform, but a restaurant’s combined spend will sit within the overall ceiling, the people said. The commission and the price-matching mandate stay unchanged.
Discounts in the initial phase will be funded by the platform, the people said. At a later stage, discounts on orders below `149-199 will be restaurant-funded and the burden will be shared on orders above `199-249. Discount spends will sit outside the cap.
Flipkart has also proposed an OTP-based consent mechanism for discounting, under which a restaurant would have to approve a campaign before it goes live, the people said. Zomato and Swiggy agreed to similar consent requirements in August after Bengaluru’s hotel and restaurant associations threatened to stop accepting orders over promotional drives run without approval.
Flipkart has begun testing the service internally among select employees in Bengaluru under the name Eat In. A wider rollout to employees is expected around mid-September, with a consumer launch in the city in October. Delivery is free during the internal testing phase. A distance-based delivery fee mechanism is still being worked out for the wider consumer rollout, sources added.
The terms are not final and are expected to change based on the results of the pilot, the people said. Flipkart did not immediately respond to requests for comment.
The market Flipkart is entering is currently dominated by Zomato and Swiggy, and is estimated by Jefferies at around $9 billion, expected to nearly triple to about $25 billion by FY30. Rapido’s Ownly entered the segment last year with a zero-commission promise and a flat delivery fee per order, while Swiggy’s Toing matches dine-in menu prices on lower restaurant take rates.
Flipkart is building the app on the Open Network for Digital Commerce rails, but is onboarding restaurants directly rather than drawing on supply already on the network, the people said. FE had reported in July that Flipkart had decided to build a standalone food delivery app rather than launch as a buyer-side application on ONDC, a route that requires it to sign up merchants and build a delivery ecosystem on its own. The ONDC food ecosystem depends heavily on magicpin for restaurant integrations.