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Government officials have in recent weeks made enquiries with several senior ecommerce executives to understand the ownership structures of quick-commerce firms and their dark stores , the mini warehouses that are crucial for the foreign-funded platforms to deliver in 15-30 minutes, people aware of the matter said. India’s foreign direct investment rules don’t allow foreign-funded online marketplaces to own inventory or control sellers on their platforms. Because of these restrictions, the dark stores are not owned by the quick-commerce platforms themselves, but by separate entities.
However, there are some grey areas in their structures. Meeting With Goyal That is where the government is seeking clarity, the people said, as the rapid expansion of quick commerce has started affecting the business of neighbourhood stores and modern retailers. The chief executive of one of the top three quick-commerce firms said he recently met commerce and industry minister Piyush Goyal and his team in Mumbai and briefed them on the nature of investors in the firm and its long-term plans.
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C.P. Gupta, Professor: Department of Finance and Business Economics, University of Delhi View Program Marketing Performance Marketing for eCommerce Brands By - Zafer Mukeri, Founder- Inara Marketers View Program But senior executives and investors in the quick-commerce segment, who did not want to be named, said they don’t anticipate any major disruptions from the government policy standpoint.
Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories “What the government officials are trying to understand is if the platforms are compliant in how they run dark stores — at an ownership level — while having raised significant foreign funding in recent months,” a person who has interacted with a government official on the matter said. “This is intelligence gathering since the sector is the buzziest in terms of consumer action and it is bound to have an impact.” Also Read | Piyush Goyal launches Bharat Startup Knowledge Access Registry The CEO who met with Goyal said the government asked him about his investors and if they were strategic or financial.
“We made a full presentation to the team on what our long-term plans are. The government is also curious as to decisions being taken in India or in the US, and thus the nature of investors is critical,” he said, adding: “All said, we are in touch with the government officials if they need any further clarity.” Also Read | Cash-rich quick commerce firms rush to grab dark store sites, personnel amid rapid growth There is a discussion to add a more defined policy framework for quick commerce in the broader ecommerce policy , this executive added.
An email sent to the Department for Promotion of Industry and Internal Trade seeking comment didn’t elicit any response till press time Monday. “Maybe they (the government) are trying to understand the economics of the impact of quick commerce. Even modern trade players will feel the pinch even if in a small manner.
Legally, there’s nothing that can be done outside stopping predatory pricing. So discount is one of the variables but apart from that I see no major risk for quick commerce as all businesses move ahead with technology,” said Karan Taurani, senior vice president, Elara Capital. “Look at the impact the sector is having.
It is bound to pique anyone’s interest and especially the government because it has to take care of all the stakeholders. Having said that, I don’t see any major disruption or a hurdle on anvil from the government's side,” a top investor in the sector said. Government regulations on FDI-funded ecommerce marketplaces had led to ecommerce platform Amazon winding down Cloudtail and Appario Retail , two of its largest sellers in India where it held stakes.
While Zepto raised $1 billion in the past two months , Zomato continues to invest aggressively in Blinkit ’s expansion and so does Swiggy in Instamart . Among others, Tata-owned BigBasket is making a complete shift to the quick-delivery model with BB Now. Flipkart has launched Minutes — its own quick offering — while rival Amazon India is readying a similar venture for launch next year, ET had reported .
Focus on top three “Ecommerce firms are still small in terms of share in fast delivery, so the focus is on how the top-three (quick-commerce) players operate,” a senior ecommerce executive said. General Catalyst-backed Kiranakart owns Zepto, but has licensed the platform to Geddit Convenience that also sells on the platform. There are other entities that also operate under a similar structure on Zepto.
Instamart and Blinkit have dark stores that are operated by separate entities. Also Read | Festive season begins with a bang: quick commerce sees jump in sales “The real question is how independent they are when it comes to execution. What sort of overlap is there — these are similar to the scrutiny ecommerce firms have been subjected to in the recent past to ensure marketplaces are not doing inventory,” one of the people mentioned earlier said.
India has been working on an ecommerce policy for a while with discussions taking place between ministries and companies, but the final approval on the draft keeps getting postponed. A report from Citi dated September 10 said quick commerce remained the fastest growing online category with Blinkit and Zepto sustaining high growth rates. A Bofa Securities report said the quick-commerce market is expected to be $22 billion by 2027 from just under $3 billion in 2023.
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