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As advertising gets pricier, FMCG firms reassess quick commerce spend
In biscuits and snacks, margins have slipped to about 13 to 15 per cent, broadly in line with those earned in modern trade.
Margins on quick commerce have declined by an estimated three to five percentage points over the past three to six months.
India’s consumer goods companies are growing more cautious about advertising on quick commerce platforms, as rising promotional costs begin to erode the channel’s once-attractive margins.
Fast-moving consumer goods makers have flagged concerns that quick commerce platforms are increasingly auctioning premium placements and peak-hour visibility, driving up advertising spends, according to a report by The Economic Times. Brands say they are paying significantly more to secure top search results and prominent listings, particularly during high-traffic shopping windows.
As a result, profit margins on quick commerce have narrowed, approaching those seen in kirana stores and organised retail chains.
Industry executives say profit margins have fallen sharply in recent months as advertising costs on quick commerce platforms have surged.
Promotional spending during peak shopping windows, typically 7:30 to 9:30 a.m. and 5:30 to 7:30 p.m., has nearly doubled, executives said, squeezing returns for brands across categories. In biscuits and snacks, margins have slipped to about 13 to 15 per cent, broadly in line with those earned in modern trade. Even premium products, which typically generate margins of 20 to 22 per cent, are facing pressure.
Taken together, overall margins on quick commerce have declined by an estimated three to five percentage points over the past three to six months, according to industry estimates.
Angshu Mallick, executive deputy chairman of AWL Agri Business Ltd, told the newspaper that higher costs have compressed the advantage quick commerce once held over traditional trade. The cost of doing business on these platforms has risen, he said, leaving margins nearly indistinguishable from general trade.
Even so, FMCG executives acknowledge that quick commerce remains a strategically important channel. Tarun Arora, chief executive of Zydus Wellness, noted that kirana stores have historically offered stronger margins due to scale, while quick commerce had benefited from premium-led sales — an edge that is now diminishing.
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