Why Zomato and Swiggy offer “free delivery” but still profit

“Free delivery” is one of India’s biggest economic illusions. Every time you order on Zomato or Swiggy, someone’s paying for that delivery—and it’s rarely the company.

The trick lies in cross-subsidization. Delivery platforms earn from multiple streams: restaurant commissions (20–30% per order), in-app ads, loyalty programs like Zomato Gold or Swiggy One, and surge pricing during high demand. Even if they lose a few rupees on one order, the overall ecosystem stays profitable.

Restaurants join because visibility on these platforms boosts their sales dramatically. Customers stay because the apps keep delivery costs low through psychological pricing—“₹0 delivery” feels irresistible even when the meal costs more.

On the backend, data is king. Every order reveals consumer habits—what you eat, when you order, how much you spend. That data helps tailor offers and refine logistics, making operations cheaper over time.

Economically, it’s a loss-leader strategy: lose a bit now to win loyalty later. And once users are hooked, platforms nudge them toward subscription plans where the real margins lie.

So next time you enjoy that “free” delivery, remember—it’s not really free. It’s just invisible economics at work.