CAIT sounds alarm on quick commerce's impact on kirana stores
CAIT said that Zepo, Blinkit, and Instamart have received a massive FDI inflow of more than Rs 54,000 crore to control logistics, warehouses, inventory, and delivery systems
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The Confederation of All India Traders (CAIT) has launched a scathing attack against quick commerce companies such as Blinkit, Zepto, and Instamart, blaming them for crushing the businesses of 'small retailers'.
CAIT has released a White Paper in which it alleged that quick commerce firms' predatory pricing scheme, such as offering heavy discounts, is crippling the abilities of kirana stores to compete.
CAIT added that three quick commerce players (Zepo, Blinkit, and Instamart) have received a massive FDI inflow of more than Rs 54,000 crore to control logistics, warehouses, inventory, and delivery systems.
QC firms stifle competition and manipulate inventory by restricting access to a closed group of a few preferred sellers, CAIT added.
Blinkit relies on just five sellers (such as Kemexel Ecommerce, TAMS Global, Superwell Comtrade ) to handle the majority of its business while Zepto bypasses the marketplace model entirely by managing its own inventor, according to the White Paper by the traders' body.
CAIT has accused Blinkit (Zomato), Swiggy (Instamart), and Zepto of violating multiple laws, including Foreign Direct Investment (FDI) and FEMA regulations to finance operational losses.
"These e-commerce platforms violate the Competition Act by restricting market access through exclusive deals with a few sellers. They offer deep discounts, engage in predatory pricing, and provide free or heavily discounted warehousing and delivery services to preferred sellers, pushing small retailers and Kirana shops out of the market," CAIT mentioned.
Additionally, CAIT said the QC platforms have also breached the Consumer Protection Act by failing to provide information about sellers to the consumers in a transparent manner.
Quick commerce has experienced exponential growth, outpacing both traditional and organized retail. The market (GMV) reached $2.8 billion in 2023, marking a 77 percent year-on-year increase.
According to the White Paper, the FDI inflow into Blinkit stood at Rs 22,996 crore, Rs 29,118 crore for Instamart, and Rs 2,763 crore for Zepto. Zepto dominates 94 percent of the QC market in India, followed by Blinkit (46 percent), and Instamart (27 percent), respectively.
'Operating losses of QC firms'
The apex trading body has alleged that QC platforms have incurred massive operating losses, which have been heavily funded by foreign capital.
For instance, Blinkit witnessed an infusion of Rs 22,996 FDI with Rs 10,417 crore in cumulative losses.
In Instamart, Rs 29,118 crore of capital has been pumped in via the FDI route with Rs 5,200 crore in cumulative losses. Whereas, FDI inflow in Zepto was Rs 2,763 crore and the platform incurred Rs 4,200 crore of losses.
'Struggling kirana stores'
According to the NIQ Shopper Trends 2024 report, 31 percent of urban consumers have turned to quick commerce platforms for their primary grocery shopping.This shift has led FMCG giants like Procter & Gamble Hygiene and Health Care Ltd (PGHH) to double their sales through QC channels, while brands like MTR report that 9 percent of their revenue now comes from these platforms, largely from affluent consumers.
Citing CNBC report, a sister publication of Storyboard18, CAIT said nearly a quarter of India’s three crore Kirana stores are on the brink of closure as they grapple with losing customers to the fast, convenient, and competitively priced services offered by quick commerce platforms.
