FMCG distributors flag deep discounts by quick commerce companies

AICPDF says qcomm firms' deep discounting, predatory pricing put small retailers and distributors under immense pressure

Fast-moving consumer goods (FMCG) distributors' association has written to the finance ministry, highlighting concern over fund utilisation and fund accumulation by quick-commerce companies and deep discounting of goods on their platforms. 

 

According to last week’s letter seen by Business Standard, All India Consumer Products Distributors Federation (AICPDF) noted that its analysis indicated that approximately 80 per cent of these funds were directed toward customer acquisition strategies instead of creating cutting-edge innovations or sustainable growth models for the retail sector. 

 

It stated that quick-commerce firms were raising capital which is used in deep discounting and predatory pricing. 

 

“Such practices are creating immense pressure on small retailers and distributors who form the backbone of India’s FMCG distribution network,” the letter said.

 

“These businesses cannot compete with heavily subsidised prices leading to a significant loss of livelihood for eight crore traditional retail traders,” it said. 

 

It has asked for immediate intervention to impose a temporary halt on new investments into quick commerce platforms until the Competition Commission of India (CCI) and other authorities conclude investigations over FDI regulations, labour laws, and ethical practices. 

 

Last month, the distributors’ body wrote to the CCI and highlighted traditional supply chain problems emanating from the rapid growth of quick-commerce platforms, including their appointment by several companies as direct distributors of FMCG items.

 

It has also demanded a probe into fundraising/utilisation to ensure transparency in its deployment.

 

“Develop regulatory frameworks, mandate fair market practices, and ensure that quick commerce platforms operate sustainably and ethically,” the letter read. It also pitched for policies to protect small retailers and distributors. 

 

Earlier this month, the Food Safety and Standards Authority of India (FSSAI) asked e-commerce and quick-commerce food business operators (FBOs) to ensure a minimum shelf life of 30 per cent or 45 days before the expiry of products at the time of delivery to consumers. 

 

The directive was part of its effort to reinforce compliance requirements for online food business operators. Over 200 industry bodies and platforms, including Blinkit and Zepto, attended the meeting convened by FSSAI. 

 

Last month, the distributors federation also wrote to the Ministry of Health and Family Welfare, and the Ministry of Road Transport and Highways, seeking an inquiry into the use of private vehicles by quick commerce and e-commerce companies for commercial operations.