Quick commerce margins fall as FMCG brands spend more on platform ads

FMCG firms are reportedly being forced to spend more on advertising to stay visible on quick commerce platforms, where shoppers make impulse purchases within seconds

Quick commerce, once the most profitable sales channel for consumer goods makers, is becoming less attractive as rising advertising costs eat into margins, according to a report in The Economic Times.

 

What is driving margin pressure on qcomm platforms?

 

Fast-moving consumer goods (FMCG) companies are being forced to spend more on advertising to stay visible on quick commerce platforms, where shoppers often make impulse purchases within seconds.

 

• Platforms now auction premium listings and time slots.

• Brands pay higher prices to appear in top search results.

• Advertising spends have surged, especially during peak shopping hours.

 

As a result, profit margins on quick commerce have fallen to levels similar to kirana stores and organised retail chains.

 

What are FMCG companies saying about rising ad costs?

 

The news report quoted Angshu Mallick, executive deputy chairman at AWL Agri Business Ltd, as saying that cost pressures have narrowed the gap between quick commerce and traditional trade.

 

Mallick said the cost of doing business on quick commerce has increased, making profit margins nearly the same as those in general trade.

 

He added that in price-competitive categories such as staples and essentials, brands that are not among the top three or four listings risk losing sales, forcing companies to spend more on visibility, as consumers typically take 30–40 seconds to make a decision.   

 

How sharply have margins fallen in recent months?

 

Industry executives said margins have dropped sharply in recent months.

 

• Advertising costs during peak slots — 7:30–9:30 am and 5:30–7:30 pm — have nearly doubled.

• In biscuits and snacks, margins are now around 13–15 per cent, similar to modern trade.

• Premium products earn 20–22 per cent, but even these have seen pressure.

• Overall margins have fallen 3–5 percentage points in the past three to six months.

 

Until recently, quick commerce offered higher margins due to premium product sales, lower distribution costs and shorter credit cycles.

 

Why do FMCG firms still value quick commerce?

 

Despite margin pressure, FMCG firms say quick commerce remains an important channel.

 

The news report quoted Zydus Wellness Chief Executive Tarun Arora as saying kirana stores traditionally offer better margins due to scale, while quick commerce had benefited from premium sales.

 

He said the advantage has narrowed as quick commerce platforms focus on improving their own profitability and negotiate more aggressively with brands.   

 

Why does quick commerce continue to grow rapidly?

 

Quick commerce continues to expand rapidly across India.

 

• It initially impacted neighbourhood kirana stores.

• It is now replacing purchases from modern trade and online grocery platforms as well.

 

Major FMCG players such as Hindustan Unilever, AWL Agri Business, Emami, ITC, Marico and Dabur are seeing strong growth from this channel.

 

For Hindustan Unilever, around 70 per cent of sales still come from general trade, 20 per cent from modern trade, 8 per cent from e-commerce and the rest from other channels. The company doubled its quick commerce sales in the first half of the current financial year, the news report said.