Trade Body Urges FMCG Giants to Halt Quick Commerce Supplies Over Unfair Pricing, Deep Discounting

The All India Consumer Products Distributors Federation (AICPDF) urged fast-moving consumer goods (FMCG) Giants across India to halt supplies to quick commerce platforms, devaluing traditional trade. Taking to X, the distributors’ body addressed companies like Hindustan Unilever, Britannia, Nestle, Godrej, Dabur, P&G, and others in its open letter.AICPDF's Open Letter to FMCG Giants – A Call for Fairness and AccountabilityIn a bold and united stance, AICPDF has issued an open letter to FMCG companies across India, urging them to halt supplies to quick commerce platforms that are undermining traditional trade.

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pic.twitter.com/ArjBsR8gpQ— AICPDF (@aicpdf_official) April 9, 2025What are its key demands?To begin with, the AICPDF emphasized its commitment and support through investments in capital and resources to make FMCG brands “household names”.

Later, the body delved into multiple reasons why general trade was facing an existential crisis:Unethical deep discounting and predatory pricing strategies creating artificial price wars. Unsustainable operating models and erosion of margins. Preferential treatment for quick commerce and e-commerce platforms.

Given these concerns, the body prompted FMCG companies to initiate corrective actions to “restore balance in the marketplace”. It suggested measures like policies to guarantee fair margins and equitable treatment to general trade partners and the establishment of fair, comprehensive trade agreements. The AICPDF also requested the abolition of deep discounting practices and the creation of a level playing field.

The federation set a deadline of April 30, 2025, for a meeting between the companies’ leadership and its delegation. If there is no positive response, the AICPDF claims to take firm action. This included suggestions of a nationwide non-cooperation movement and a public challenge to brands disregarding fair trade ethics.

Previous AICPDF offensivesThis is not the first time AICPDF has voiced concerns against the operations of quick commerce platforms. Earlier in March this year, the federation submitted a petition to the Competition Commission of India (CCI) seeking regulation and the implementation of mandatory price floors on products sold via such platforms. The body sought a 10% price floor on FMCG products and a 2-3% floor on non-FMCG products.

Besides this, the distributor body has previously written letters to various ministries highlighting the anti-competitive practices of quick commerce platforms and seeking remedial measures as follows:Finance Ministry: Seeking the halt of new investments, following concerns over fund accumulation and predatory practices in November 2024.Ministry of Road Transport and Highways: In October 2024, the trade body noted issues like quick commerce platforms using private vehicles for deliveries, potentially lacking insurance and standards, in a letter written to CCI.Ministry of Health and Family Welfare: Non-compliance with the standards mentioned above violates the Food Safety and Standards Authority of India (FSSAI) norms.

Ministry of Commerce & Department for Promotion of Industry and Internal Trade (DPIIT): Quick commerce platforms use dark stores to bypass foreign direct investment (FDI) norms, undertake predatory pricing, and have concerning labour practices. Quick commerce vs Kirana stores battleMoving forward, AICPDF’s contention of quick commerce harming general trade also extends to threats to the existence of Kirana stores. Earlier in October 2024, the federation claimed that the quick commerce boom has led to the closure of 2 lakh Kirana stores in a year, with the Confederation of All India Traders (CAIT) later echoing similar problems.

Notably, Kirana stores account for 90% of FMCG sales in India, as observed by market company CLSA’s App-racadbra 2024 research report. Additionally, the report highlighted that very few organised retail formats have successfully encroached on the market share of traditional Kirana stores, a trend that seems to potentially change with the arrival of quick commerce platforms.Furthermore, the report delved into key advantages of quick commerce platforms over Kirana stores, including the separation of product discovery and leveraging customer data to personalise product assortment.

However, one of the most significant aspects that could propel FMCG brands toward such platforms is the process of drying up the delivery moat. To explain, in the general trade system, a complex distribution network of three to four layers— clearing and forwarding (C&F) agent, distributor, wholesaler, and retailer— exists between the FMCG firm and the customer. This system provides leading FMCG companies greater competitive advantage, owing to difficulties for subscale businesses to operate within such a system.

However, the report foresees that quick commerce will offer direct-to-customer (D2C) brands an easier mechanism to capture a pan-India audience without a deep distribution network.Why it matters:Over the last year, many e-commerce companies have also tossed their hat into the quick commerce ring. Notably, consumer preference toward such avenues also seems to be rising, with 31% of urban consumers depending on quick commerce platforms to match their grocery needs.

However, as new companies test the waters of quick commerce and more established players like Zepto, Instamart, and Blinkit expand beyond metro cities and into tier 2, 3, and 4 cities, Kirana stores and the general trade network could see more disruption. However, the expansion drive of the aforementioned quick commerce companies is not outright aggressive, with growth being potentially stagnated. To explain, in its Q3FY25 earnings call, Blinkit’s top brass reaffirmed their approach of focusing on the top eight cities, which it believed were “underserved from a supplier standpoint”.

Similarly, Swiggy had previously contended that it was close to operating in the number of cities it requires and that anything beyond it would be a “vanity metric”. However, as quick-commerce platforms play the expansion game, albeit in a controlled manner, several concerns by labour unions, restaurant bodies, and trader bodies cannot be disregarded.Also Read:AICPDF Files Antitrust Case against Quick Commerce Platforms over Deep Discounts.

Here are its DemandsMedianama Analysis: Is Differential Pricing Shaping Up as a Quick Commerce Trend? A look at Price Disparities across Blinkit, Instamart, and ZeptoHow Quick Commerce is Challenging both E-Commerce and Kirana StoresThe post Trade Body Urges FMCG Giants to Halt Quick Commerce Supplies Over Unfair Pricing, Deep Discounting appeared first on MEDIANAMA..