Distributors' body writes to PM on Zepto's IPO, flags its impact on trade

AICPDF raises concerns over quick-commerce expansion, seeks review of Zepto IPO and safeguards for traditional FMCG distribution network

The All India Consumer Products Distributors’ Federation (AICPDF) has written to Prime Minister Narendra Modi on Zepto’s proposed initial public offering (IPO) and its potential impact on the traditional fast-moving consumer goods (FMCG) distribution network. 

 

In its letter, the AICPDF stated that the expansion of quick-commerce platforms such as Zepto, Blinkit, and Swiggy (Instamart) has caused significant disruption.

 

In December, the distributors’ body had written to the Securities and Exchange Board of India (Sebi) seeking regulatory intervention in relation to IPO filings by loss-making quick commerce (qcom) and ecommerce (ecom) companies. 

 

This move follows Zepto receiving in-principle approval from Sebi for its IPO. 

 

“During the financial year 2024-2025, nearly 200,000 kirana and small retail stores are estimated to have shut down. In FY26, the situation has escalated sharply, with an estimated 1 million kirana stores reportedly shutting down due to sustained pricing pressure, loss of margins, and diversion of demand towards heavily discounted qcom platforms. Existing retailers have also reported sales decline of 25 to 30 per cent, with higher declines in several urban markets,” AICPDF said in its letter. 

 

The letter also noted that the share of traditional kirana stores in FMCG distribution has declined from around 81 per cent to 79 per cent. 

 

“Simultaneously, FMCG manufacturers are increasingly required to incur higher trade discounts, platform commissions, and advertising expenditures to participate in qcom channels. This has resulted in margin compression across the supply chain, affecting distributors and retailers and weakening the sustainability of the traditional distribution system,” the letter said. 

 

The letter added, “In this context, the proposed IPO of Zepto assumes critical importance. Zepto was founded in 2020 as KiranaKart by Aadit Palicha and Kaivalya Vohra during the Covid-19 pandemic. In April 2021, the company pivoted to a dark-store model and rebranded as Zepto, offering 10-minute grocery delivery.” 

 

The letter stated that Zepto rapidly expanded across major metropolitan markets and introduced services such as Zepto Cafe, Bloom, and Zepto Pass. It said that the company’s revenues grew significantly from nearly ₹4,454 crore in FY24 to around ₹9,669 crore in FY25, losses also widened to approximately ₹3,367 crore due to aggressive expansion. 

 

“The company has undertaken one of the most aggressive capital-raising cycles in India, raising nearly $2.3 billion and reaching a valuation of around $7 billion. On 7 April, Sebi granted in-principle approval for its proposed IPO of nearly ₹11,000 crore,” the letter stated.

 

It has requested that Zepto’s IPO be kept in abeyance and also asked for Sebi to respond to its representation made in December and has also asked for the Competition Commission of India to examine the issue of predatory pricing and deep discounting by qcom platforms. It has also asked for a policy to safeguard to protect kirana stores, distributors, and the FMCG supply chain from further erosion.