4 hours Ago By Ishika Gupta
Explainer Briefly Slides Last week, the All India Consumer Products Distributors Federation (AICPDF) noted concerns over fund accumulation and predatory practices by quick commerce companies in a letter to the Finance Ministry. The AICPDF based their analysis on recent reports detailing how Zepto was looking to raise $300 million in funding from high-net-worth individuals (HNIs) and wealth management firms after raising $1 billion over the past few months. They claimed that over 80% of such funds were employed in developing “unsustainable customer acquisition strategies” rather than fostering innovation or sustainable growth in the retail sector.
How does this impact retailers? The AICPDF claimed that heavily subsidized prices by quick commerce platforms like Instamart, Zepto, and Blinkit led to the loss of livelihoods for eight crore traditional retailers and a reduction of entrepreneurial opportunities for small businesses. Recently, the Confederation of All India Traders (CAIT) also accused quick commerce platforms of misusing foreign direct investment (FDI) to fund predatory pricing and deep discounting. The traders’ body alleged that such anti-competitive practices shrink the revenue of Kirana stores.
To explain, quick commerce platforms captured over 25-30% of the business traditionally held by Kirana stores. What did AICPDF request? Concluding the letter, the distributors’ body sought the government to cease any new or ongoing investments within such platforms until the Competition Commission of India (CCI) and other authorities finish their investigation into compliance with FDI regulations and labour laws, among others. Besides this, the body advocated for audits of funds raised by such companies, the encouragement of ethical investments, the development of regulatory frameworks, and finally the development of policies to safeguard small retailers.
Previous objections by AICPDF Last month, the distributors’ body urged the CCI to initiate action against quick commerce platforms for operating dark stores and subsequently bypassing government regulations on inventory-based e-commerce. In their letter, the body also emphasized problems plaguing the traditional supply chain due to the rapid growth of quick commerce platforms and their selection as direct distributors of FMCG companies. Likewise, capital market company CLSA in their App-racadabra research report 2024 remarked on the ability of quick commerce entities to increase competition and later use their higher margins to undercut prices and gain market share.
To explain, quick commerce platforms can easily bypass traditional distributor networks within the supply chain and hence price their products lower than traditional retailers. Additionally, the report disclosed that quick commerce entities expanding without major traditional advertising costs can undercut existing retailers. In October 2024, the AICPDF wrote the Ministry of Health and Family Welfare and the Ministry of Road Transport and Highways requesting an inquiry into the use of private vehicles by quick commerce and e-commerce companies for their deliveries, Business Standard reported .
Additionally, they sought compliance with food regulator norms when such platforms delivered food products. In September 2024, the distributors’ body filed a complaint alleging that key problems within the quick commerce ecosystem were ignored in the “name of technology, convenience, and the Indian ownership of some firms”. Alongside allegations of FDI violations, predatory pricing, and deep discounting, the AICPDF also pointed to labour practices such as third-party payroll employment.
The complaint filed with the Ministry of Commerce and Department for Promotion of Industry and Internal Trade was later directed to the CCI. Other concerns with such entities In response to AICPDF’s concerns about food safety violations by online platforms, the Food Safety and Standards Authority of India (FSSAI) convened a meeting with the relevant parties. Later, the FSSAI directed e-commerce food sellers to ensure that food products have a minimum shelf-life of 30% or 45 days before expiry at the time of delivery to the customer.
Besides this, in April 2024, the Central Consumer Protection Authority probed into the accuracy of the “10 minutes or less” delivery time advertising claims made by quick commerce entities. Also Read:.
