Home / Companies / Start-ups /  Swiggy, Zomato hike delivery boy salaries as competition grows

New Delhi: Next time you order food from Swiggy or Zomato, don’t be surprised if the delivery boy serves you with a smile. Delivery staff at startups such as Swiggy (Bundl Technologies Pvt. Ltd) and Zomato Media Pvt. Ltd have seen their incomes surge in the past six months as the food delivery companies fight an expensive battle to gain a bigger foothold in this fast-growing market.

Such delivery boys now earn between 25,000 and 50,000 per month, depending on factors such as the number of deliveries completed and the distance they cover, according to interviews with more than a dozen delivery staff and executives. It’s a sharp rise from the 10,000-25,000 the workers earned last year. Incomes of the blue-collar workers have risen by at least 25-30% on average compared with last year partly due to higher incentives.

But the sharp rise in incomes mostly reflects the boom in the Indian online food delivery market, which is expected to triple in size over the next three years from $700 million in 2017, according to RedSeer Consulting.

Swiggy confirmed that incomes of their delivery staff have increased. “As Swiggy continues to witness a strong growth in the number of monthly orders, our delivery partners have been able to carry out a higher number of deliveries," a spokesperson for Swiggy said by email. “Since they are paid per order, the increase in number of orders fulfilled by them has resulted in an increase in pay-outs."

The spokesperson said Swiggy has one of the largest food delivery networks in the country with around 55,000 delivery partners across 15 cities. Zomato did not respond to a request for comment.

Some analysts said that the trend of rising incomes of delivery staff isn’t sustainable.

“With such fast growth, there are challenges for the companies to fulfil which leads to higher pay out to delivery executives. It is a short-term trend and cannot be a sustainable strategy because any hyperlocal industry is tight on unit economics and they cannot keep burning money," said Ujjwal Chaudhry, engagement manager, e-tailing, at RedSeer.

The sudden increase in incomes of food delivery staff has drawn comparisons with cab drivers, whose high initial incomes turned out to be unsustainable. Cab aggregators Ola and Uber, who in 2014-15 handed out massive commissions to drivers, eventually slashed driver incentives to cut losses.

“What you saw in 2014-15 with Ola and Uber is happening again now—the commissions that those companies were paying out back then eventually proved to be unsustainable. And the same thing will happen again," said Sahil Kini, principal at Aspada Investments and a columnist with Mint. “The bottom line is that this model is untenable and can’t carry on forever because demand is driven primarily by discounting."But entrepreneurs running hyperlocal delivery businesses pointed out that the two models are different and cannot be compared. They also said that incentives for their delivery staff are far lower than what Ola and Uber were paying drivers in the go-go years of 2014-2015.

“While incomes of delivery personnel have gone up over the past year or so, it can’t be compared to what happened at Ola and Uber," said Kabeer Biswas, co-founder of Bengaluru-based Dunzo, a hyperlocal delivery startup. He said any increase in incomes of food delivery staff “depends on factors such as money per transaction, utilization, supply, number of transactions per hour and number of hours." “If a partner is online for more hours, they increase their supply hours, which means they get more tasks to complete, thereby increasing their earnings on the platform," said Biswas. “Increasing any one of these variables, would lead to a compounding effect, even if it might look like a minor change."

Uber Eats India head Bhavik Rathod said that incentives for the company’s delivery staff typically vary by the hour and also depend on areas where they deliver. For instance, tony neighbourhoods such as Indiranagar and Koramangala in Bengaluru typically witness higher volumes of orders, compared to other parts of the city, and delivery staff typically complete more deliveries in such areas in a given amount of time, thus earning higher incentives.

“In the coming months, you can expect several benefits we will be bringing together for the delivery partners including everything from insurance, all the way to helping them in financing a bike," said Rathod.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout