It is difficult for a business journalist to be a smug customer. There is often a natural tendency to do back-of-the-envelope calculations on the profit margins of the products or services they purchase. As an occasional customer of Zomato and Swiggy, I am not surprised that stock market analysts have raised their eyebrows—and lowered their potential earnings expectations—after the government brought food delivery under its 18 percent goods and services tax (GST) net in its new tax reshuffle.
Morgan Stanley says that for Zomato, food delivery has an average service fee of Rs 11-12, which can now rise up approximately to Rs 14.5 per order —or Rs 2 per order. For Swiggy, the estimated average delivery fee is at Rs 14.5 per order, a potential impact of Rs 2.6 per order.
We will have to wait and see whether the companies absorb the tax by lowering their fees or do newer things to grow their business. But there is little doubt that they have to do their own Strategy 2.0 to match the GST 2.0.