Fast and now under fire: Quick-commerce firms face heat from regulators

After scaling up at breakneck speed, India’s quick-commerce (qcom) sector is facing mounting regulatory scrutiny. The Competition Commission of India (CCI) has, for the first time, launched a preliminary investigation into the conduct of qcom platforms following allegations by the All India Consumer Products Distributors Federation (AICPDF), the country’s biggest retail distributors’ association, that these players are engaging in anti-competitive practices.

 

For AICPDF National President Dhairyashil Patil, the probe is a crucial milestone in the battle he launched in 2024. A veteran of the traditional distribution network, Patil says qcom has significantly disrupted the offline ecosystem — causing distribution volumes to dip by 10–15 per cent nationally, and up to 25 per cent in metros, and Tier-I, -II cities.

 

“We’ve seen a sharp shift wherever quick commerce has entered a city,” he said. “Offline sales — especially for kirana stores — begin to drop.”

 

According to a report by Blume Ventures, an early-stage venture fund, India’s qcom market surged from $300 million in FY22 to an expected $7.1 billion in FY25 — a 24x jump in gross order value — with the user base doubling. However, now there appear to be hurdles, with regulators and consumer bodies questioning operational practices, pricing strategies, and data ethics.

 

Under the lens

 

From the Food and Drug Administration (FDA) initiating action against certain firms to the Central Consumer Protection Authority (CCPA) issuing advisories over the alleged use of dark patterns, and fast-moving consumer goods associations filing petitions over deep discounting practices, the scrutiny is no longer subtle.

 

The Maharashtra FDA recently revoked the food business licence of Blinkit’s dark store in Pune’s Balewadi region over regulatory violations. It also asked Zepto to suspend operations following a surprise inspection at its Dharavi facility in Mumbai.

 

“Blinkit had submitted some documents, and we asked them to modify some of those and submit them again,” Suresh Annapurna, joint commissioner at Maharashtra FDA, Pune region, told Business Standard.

 

The FDA officials reportedly found that the dark store concerned was storing, distributing and selling food items without the requisite licence from the Food Safety and Standards Authority of India (FSSAI), which is mandatory under the Food Safety and Standards Act of 2006. The facility also operated in unhygienic conditions, violating food safety standards, the FDA found. 

 

“We are adhering to all food safety regulations and will continue to strengthen our internal protocols,” a Blinkit spokesperson told Business Standard. “One of our dark stores in Pune that had to pause operations has also renewed its licence now,” the spokesperson added.

 

The inspection at Zepto, meanwhile, raised several concerns over food safety and hygiene, including fungal growth on some food items, inadequate cold storage temperature control, improper segregation between expired and valid stock, food stored directly on the floor, wet and unclean flooring, and the presence of stagnant water near stored food products. However, both companies restarted operations after securing the required documentation and a complaint review.

 

Over the past few months, food security authorities have stepped up surprise inspections at dark stores, which are growing in number. According to its Q4FY25 results, Blinkit has 1,301 dark stores, which it plans to scale up to 2,000 by December 2025 - a year ahead of target. Its rival, Zepto, has over 900 dark stores.

 

While the FDA has swung into action, the CCPA is also pushing platforms to address misleading mobile application designs like false urgency, hidden charges, or disguised ads, which can erode consumer trust and result in regulatory prosecutions. In the first week of June, the authority sent an advisory to over 50 online platforms, including qcom companies, to eliminate dark patterns and conduct self-audits in three months. 

 

An imperfect model?

 

The scrutiny extends beyond compliance. Analysts and investors are beginning to question the sustainability of qcom’s hectic growth.

 

For instance, the Blume Venture report notes that much of India’s consumption is led by India1 (the affluent consumer class). Within that is a subset called Alpha1, which forms 8-10 million households. The report states that though this segment is growing, it is not widening faster when compared to other segments. “The growth in MTUs (monthly transacting users) will thus attract marginal users, not power users, and thus orders nearly doubling will be challenging,” the Blume Venture report said.

 

There are also complaints from consumers on social media about the quality of products and dark patterns. These complaints range from unclear billing amounts to expired food being delivered.

 

One consumer, who did not wish to be named, said he started using qcom out of convenience. “But lately, I have observed that orders are getting expensive, with all sorts of charges,” he said, adding that earlier only platform fees would be charged, but now there is also a processing fee, a membership fee, handling charges, and so on.

 

The compliance question

 

Heightened regulatory scrutiny could mean higher compliance costs for qcom firms. According to Bajaj Broking Research, stricter regulations could raise operating costs by 10-15 per cent due to compliance needs, such as better storage facilities and audits, and weaken customer retention by 20-30 per cent if discounting is curbed. “This may compress margins by 3-5 per cent and delay profitability timelines, particularly for firms relying on aggressive growth strategies,” the research firm said.

 

It added that startups may face higher compliance costs, and a 15-20 per cent dip in sales in sensitive categories such as babycare products, personal care items, and nutritional products. They may, however, benefit from reduced predatory pricing by larger brands, prompting a strategic shift toward omnichannel distribution and a focus on quality and differentiation rather than only pricing.

 

From the investors’ point of view, compliance is no longer a back-office concern; it’s central to the long-term viability and valuation of qcom platforms.

 

Mani Singhal, managing director and co-lead, Consumer, Consumer Tech, and Retail Practice at Alvarez & Marsal India, a professional services firm, is of the view that investor sentiment around qcom has become more nuanced. Earlier, the focus was on growth metrics such as gross merchandise value (GMV), customer acquisition, and delivery time. However, as the category matures, there’s growing scrutiny on what it takes to operate compliantly at scale. 

 

“Regulatory notices, whether around food safety or dark patterns in marketing, are reminders that these are not just tech platforms — they are operationally intensive businesses that touch millions of consumers daily,” said Singhal. “While investors aren’t pulling back en masse, they are beginning to differentiate between players who can institutionalise compliance

and those who remain in firefighting mode.”

 

The regulatory interventions will have investors rethinking their assessment strategies for qcom platforms, added Karun Mehta, partner at law firm Khaitan & Co. “With the FSSAI stepping up checks on how food is stored and handled in dark stores, especially after several high-profile violations, there’s a growing sense that the sector can no longer afford to take shortcuts on hygiene or safety,” Mehta said.

 

From an investor’s perspective, all this would be a red flag. “Compliance is now central to how they assess value and risk,” Mehta said, adding that investors would focus on whether the platforms have robust compliance processes, transparent governance, and a culture that takes regulation seriously. All of this translates to better store hygiene, cleaner pricing practices, and stronger delivery protocols.

 

These compliance imperatives may accelerate the transition to healthier unit economics by curbing unsustainable practices and rewarding operational excellence, said Satish Meena, founder of data platform Datum Intelligence. Given the pace at which dark stores have grown, with companies at times compromising on compliance, regulatory scrutiny will become all the more important, Meena said.

 

The writing is on the wall. It is the fittest of the fastest who will eventually survive.   

In the cart 

In all, 5,000-5,500 dark stores expected by the end of FY26: HSBC report

  Stricter regulations can increase operating costs by 10–15%: Bajaj Broking Research

  Qcom market expected to grow by 75-85% in 2025: Teamlease report

  Qcom GMV expected to touch $5 bn in 2025

  Average monthly orders per customer grew from 4.4 in 2021 to 6 in 2024

  Monthly transacting users up 40% in 2024 over the prior two years

  Qcom accounted for over two-thirds of all e-grocery orders in 2024