"Quick commerce needs careful scrutiny, regulation to protect small traders": FMCG industry body to Union Minister Piyush Goyal
Aug 24, 2024
New Delhi [India], August 24 : All India Consumer Products Distributors Federation (AICPDF) has written a letter to Piyush Goyal expressing its concerns over the "unchecked expansion" of quick commerce platforms, days after Union Commerce and Industry Minister said E-commerce companies are "eating into the small retailers."
The industry body in its letter said, "They would like to draw your (Goyal's) attention to the pressing issue of quick commerce which also needs careful scrutiny and regulation to protect small traders."
The industry body further stated that the rapid growth of quick commerce platforms such as Blinkit, Zepto, and Instamart are posing a significant challenge to the traditional retail sector and the established fast-moving consumer goods (FMCG) distribution network in the country.
The industry body said that it acknowledges the role of innovation and technology in shaping the future of quick commerce, however, the "unchecked expansion" of these platforms is leading to severe descriptions in the retail ecosystem.
The industry body further added, "Specifically, we are witnessing the erosion of small 'mom and pop' stores and a shift in the FMCG distribution landscape, as these platforms are increasingly being appointed as direct distributors by major FMCG companies, side-lining traditional distributors."
The industry body said that it has "serious concerns" regarding the "compliance of" these platforms with India's Foreign Direct Investment rules that prohibit e-commerce entities operating under the marketplace model from holding inventories or exercising control over the inventory sold on their platforms.
"However, it appears that these quick commerce platforms may be engaging in practices that blur the lines between a marketplace and an inventory-based model, potentially violating FDI norms," the federation said.
It further said that this situation is not only creating an "uneven playing field" but is also threatening the livelihood of millions of small retailers and distributors who have been the backbone of India's retail sector for decades.
Notably, on August 21, Union Minister Goyal raised concern about the functioning of the E-commerce sector, saying that E-commerce is eating into small retailers by giving heavy discounts on products.
Goyal charged E-commerce players with predatory pricing and not giving a level playing field to small retailers.
