Swiggy's Instamart, Zepto scrap handling charges, lower delivery fee thresholds as competition heats up

The wave of fee waivers comes amid rising competitive intensity in India’s rapidly growing quick commerce market, where major players are doubling down on promotions and convenience to win customer loyalty during the festive season.

How much is “free delivery” really costing platforms?

While the race to zero fees benefits customers, it comes with clear financial trade-offs for platforms.

Delivery fees typically go directly towards compensating delivery riders — covering costs such as per-order payouts and incentives — and, therefore, do not meaningfully contribute to company revenue. When platforms waive delivery charges, they absorb that cost entirely as a platform expense.

Handling fees, on the other hand, serve as supplemental income for the platforms and flow directly into company revenue. This means waiving them, as Instamart and others have done, has a more direct impact on profitability.

According to Swiggy’s Q2 FY26 financial disclosures, Instamart delivered 100.8 million orders during the quarter, with an average handling fee of Rs 9.80 per order. Given its average order value (AOV) of Rs 697, most users will now qualify for free delivery under the new policy.

On a back-of-the-envelope calculation, this means Swiggy could be forgoing close to Rs 99 crore in handling fee revenue each quarter. The estimate assumes all qualifying orders now fall under the free delivery bracket and is purely indicative — actual figures may vary based on order size, user mix, and offer eligibility.

Still, the math underscores how far platforms are willing to go on pricing to retain users and push order frequency during a high-traffic festive season.

“This gives customers a reason to switch between platforms,” said Satish Meena, founder of e-commerce consultancy Datum Intelligence. “In quick commerce, people order multiple times a week, so free delivery is a strong incentive. If one app removes fees, others have to match that to stay competitive.”

Why are quick commerce players waiving fees now?

The fee waivers are the latest sign of a renewed price war that has been building for several quarters. All major players are scaling their networks, investing in marketing, and experimenting with new incentives to lock in users.

Zepto, backed by its recent fundraise, crossed 20 lakh daily orders during the Diwali week and is investing heavily in offers, replenishment, and fulfilment speed to consolidate its position, Moneycontrol has reported earlier.

Blinkit, meanwhile, is executing one of the most ambitious network expansions in the space — adding 271 new dark stores in Q2 FY26 to take its total to 1,816, and targeting 3,000 by March 2027.

“Competitive intensity has been rising steadily,” Meena told Moneycontrol earlier. “Zepto wants to go public as a strong number two, Blinkit is expanding rapidly, and Swiggy and Flipkart are leaning on offers to stay top-of-mind. The next 3-4 quarters will see aggressive spending from everyone.”

What does this mean for Swiggy’s Instamart?

For Swiggy, the fee waiver fits into a broader shift in its quick commerce strategy — from expansion to retention. The company added just 40 new dark stores during the September quarter, taking its total to 1,102, compared to Blinkit’s 271 additions.

“Swiggy is in a tricky spot,” Meena said. “Expanding into new cities is expensive, and smaller towns don’t yet have the same quick commerce demand as metros. So the only way to grow now is to gain share in the top cities — and that’s what these offers are designed to do.”

Instamart’s numbers underscore its continued momentum. The platform’s revenue grew 102 percent year-on-year in Q2 to Rs 1,038 crore, while its gross order value (GOV) more than doubled to Rs 7,022 crore. The company’s board is also set to meet on November 7 to consider a Rs 10,000-crore qualified institutional placement (QIP), which could provide additional flexibility to pursue growth in quick commerce and food delivery.

How is competition shaping up across the sector?

Across the board, India’s quick commerce platforms are racing to balance growth and sustainability in an increasingly capital-intensive market.

Reliance’s JioMart, for instance, has been leveraging its retail network of over 3,000 stores to expand into smaller cities, while Amazon Now and Flipkart Minutes are focusing on metros with tech-led delivery models.

As competition deepens, industry watchers expect players to use a mix of price incentives, faster delivery speeds, and loyalty programmes to retain high-frequency customers. The next few quarters will reveal whether these fee cuts can sustain long-term engagement — or if they mark another short-lived phase in the quick commerce discount cycle.