Consumer Affairs Ministry examining quick commerce competition issues

The Ministry of Consumer Affairs is in the process of examining the issue of quick commerce players impacting businesses of local kirana stores, a senior government official said on Monday.

“We are still in the process of examining the issue. We have to find a balance between consumer satisfaction and different stakeholders to find the best possible solution for the issue,” the official told Business Standard.

Business Standard had earlier reported that the ministry has raised the issue with the corporate affairs department during discussions around the proposed digital competition Bill.

The ministry has given inputs to the Competition Commission of India (CCI), the official quoted above further said.

They added that the CCI will also seek inputs from stakeholders like the Retailers Association of India (RAI) to address the issue.

Commerce and Industry Minister Piyush Goyal had said in August that the government is not opposed to e-commerce, but is focused on ensuring fair competition between online and offline businesses.

Goyal had earlier said that the e-commerce sector’s rapid growth is a “cause for concern” and not pride. He warned that it could lead to job losses in traditional retail. 

Following his remarks, the All India Consumer Products Distributors Federation (AICDF) had flagged the “significant challenges posed by the rapid growth of quick commerce platforms compared to the traditional retail sector and the established fast-moving consumer goods (FMCG) distribution network in the country.”

“The unchecked expansion of these platforms is leading to severe disruptions in the retail ecosystem. Specifically, we are witnessing an erosion of small mom and pop stores,” AICPDF had stated in a letter to Goyal.

According to a recent report by Elara Securities, kirana stores have been hard hit due to adoption of quick commerce, as sales declined by up to 25-30 per cent compared to the pre-Covid period.

“This is because of the rapid adoption of quick commerce for FMCG sales, which provides products at a discounted price with superior user experience,” the report stated.

“Almost 20-25 per cent of the outlets (30 million) may shut if quick commerce continues to grow and expand in the non-metro markets,” it added.